Beach will give Anzon two cash payments totalling $39 million and a series of bonus payments for oil production during the first three years of development in VIC/RLs 6, 9 and 10 in the Gippsland Basin.

The bonuses will only be paid if oil prices exceed $64 and $58 per barrel to a maximum of $3.20 per barrel, attributable to the 12.5% interest.

Beach will also be granted an optional premium for the gas development of 2.5% of the first $100 million of capital expenditure after a decision is made to develop the Manta and Gummy gas fields.

The additional interest – taking Beach’s holding to 37.5% – became available last month when Anzon announced it had agreed to sell a 12.5% equity stake in the retention leases to an unidentified third party, believed to be a major Japanese company.

This triggered the pre-emptive rights held by Beach under the joint operating agreement with Anzon, giving Beach a deadline of this week to exercise its right.

The 12.5% acquisition will add 2.9 million barrels of proven and probable (2P) oil reserves to the company’s existing 5 million barrels reserves base, based on operator’s assessments.

"This additional key interest will not only further consolidate our position in the Gippsland Basin but also represent substantial progress in the strategy of establishing Beach as a long-term, mid-tier Australian oil and gas producer," Beach Petroleum managing director Reg Nelson said last month.

The ownership structure of the BMG project as a result of the farm-in will be Anzon Australia (operator 62.5%) and Beach (37.5%).

And as if the acquisition wasn’t enough good news for Beach this week, it has also announced the granting of an approval to conduct an extended production test on the Basker-2 well in VIC/RL6.

The test will help determine the connectivity and water drive mechanisms for the separate reservoir zones within the Tertiary-age Intra-Latrobe and Golden Beach sands to provide an indication of the overall field recovery factor.

The Ocean Patriot semi-submersible rig will be used to spud Basker-2 within the next two days, weather permitting.

Drilling and completions will immediately follow, paving the way for the well to be connected and production tested through the project’s floating production storage and offloading facility, Crystal Ocean.

Oil will be transferred to the 650,000 barrel capacity Basker Spirit offtake tanker for storage and subsequent sale.

The Crystal Ocean is expected to arrive in Melbourne later this month. The Basker Spirit is currently enroute from Europe and will arrive on location in Bass Strait in October.