Beach Petroleum announced its first move outside Australia yesterday, saying it had reached an agreement with operator Tap Oil and Australian Worldwide Exploration Ltd to earn a 20% interest in PEP 38259.
Private Perth company Claire Energy has also reached an agreement with AWE and Tap to earn a 15% stake in the same permit.
Beach will earn its 20% stake by contributing 20% to the cost of the Cutter-1 oil exploration well. It has also been required to make a 'bonus payment' for an undisclosed amount.
Cutter-1 is scheduled for drilling in the third quarter of 2006 in 75m of water about 21km off the north Otago coast.
“This is an opportunity for Beach to participate in a high upside exploration project in a lightly explored permit in which there has already been a non-commercial gas-condensate discovery, Galleon-1,” said Beach managing director Reg Nelson.
AWE yesterday told the ASX that Beach and private Perth company Claire Energy would fund AWE’s share of the expected drilling costs of Cutter-1. Operator Tap Oil is believed to have made a similar farmout arrangement with Claire.
AWE managing director Bruce Phillips told EnergyReview.net today that AWE wanted to reduce its exposure and risk in PEP 38259 as it was heavily involved in several offshore Taranaki, New Zealand permits, including the Tui Area development in PEP 38460.
“Cutter will be part of AWE’s major offshore drilling campaign planed for 2006-07 in New Zealand, which will consist of up to nine exploration and development wells in the Taranaki and Canterbury Basins," Phillips said.
“It will be our largest program yet undertaken in New Zealand, where we have great growth aspirations.”
Phillips said an earlier well in PEP 38259, Galleon-1, had produced 10.4 million cubic feet per day of gas, with associated condensate at a rate of about 200 barrels per million cubic feet of gas, when drilled in the 1980s.
Tap Oil considered Cutter had the potential to hold 70-80 million barrels of recoverable oil, while the other drillable prospect in the permit – Barque – could hold 5-6 tcf of gas, with 500 million barrels of condensate.
Nelson said Barque - in 850m water depth - represented significant upside potential for future exploration.
“The move into offshore New Zealand represents a further diversification and expansion of Beach Petroleum’s acreage and prospect portfolio to now include international exploration opportunities," he said.
Beach has been aggressively expanding this year. It has bought into a major coalbed methane project in Queensland and its first offshore production - from the Basker Manta Gummy project in the Gippsland Basin - is imminent.
Industry sources have said Beach and Claire were prepared to pay premiums to gain entry to quality offshore acreage. Claire is already involved in several Taranaki permits.
Post-farmout participants and interests in PEP 38259 will be: operator Tap Oil (40%), AWE (25%), Beach Petroleum (20%) and Claire Energy (15%).
