Bounty will sell its stake in WA-325-P and WA-327-P to Arc Energy for A$1 million cash.
An additional amount of up to A$2 million will be payable to Bounty on certain success thresholds being met following the drilling of the next two exploration wells in those permits. The thresholds are based on a subsequent start of appraisal drilling, the declaration of commerciality and the beginning of production.
The completion of the sale is subject to joint venture and statutory approvals.
The Hadda-1 well recently drilled in WA-325-P was unsuccessful, but its oil shows in tight sands pointed to the possiblity of a new exploration fairway in that area. The Blue Jacket prospect is also in that permit, while WA-327-P contains the Flying Foam prospect.
Bounty managing director Laurence Roe said this deal allowed Bounty to further focus on its producing assets.
“We are about to commence infill drilling in our Utopia oil field – if these wells are successful, and we have every reason to expect they will be - then not only will they improve the field’s cash flow and generate more revenue for Bounty, but the joint venture will be actively contemplating further development work in the near future,” Roe said.
“We are keen to optimise our producing asset and to do it expeditiously – with oil prices now at unprecedented levels, we recognise the value in converting reserves ‘in the ground’ into cash flow.
“The sale of our interests in the Perth Basin provides Bounty with an opportunity to monetise an exploration asset and to potentially underpin further work in Utopia. The deal with Arc is also structured to ensure that in the event of success in the next Perth Basin drilling program, Bounty will also enjoy a material benefit.”
Infill drilling at Utopia in south-west Queensland is expected to begin next Wednesday, August 24.
Mobilisation of the Hunt Energy Services Rig 3, which has been contracted to undertake the drilling of two new wells in the field, is underway.
The new wells, Utopia-5 and Utopia-6, are situated between existing producing wells and are expected to each contribute up to an additional 50bopd to field production.
Proposed total depth for Utopia-5 is about 1075m, with the well planned as a producer from sandstones in the Murta Formation reservoir.
Utopia-6 will spud immediately after and will drill to a proposed total depth of roughly 1400m. While it is also planned as a Murta producer, the well will test deeper exploration targets including the Hutton Sandstone – an established high-quality reservoir sandstone in the region (flow rates in excess of 2000bopd have been encountered from the Hutton Sandstone in the nearby Tarbat-Ipundu Oil Field).
Partners in the Utopia Oil Field are Bounty Oil & Gas NL 40%, and Oil Wells Inc of Kentucky 60% (operator).
On completion of farm-in, partners in WA-325-P and WA-327-P will be Roc Oil (WA) Pty Ltd 37.5% (operator), Apache Northwest Pty Ltd 37.5%, Voyager (PB) Limited 12.5%, Arc Energy Limited 7.5%, and Wandoo Petroleum Pty Ltd 5%.
