Triangle will pay a total of $3.2 million cash, for which a deposit of $819,777 has been paid, almost triple the amount agreed to by Elixir, and it will then pay an uncapped royalty of US$5/bbl is payable for oil sales in excess of US$70/bbl - and that includes any new barrels found from near-field exploration.
That compares to an up-front $1 million and capped payments of up to $9 million from Elixir.
Triangle will also take on the abandonment liabilities.
With the sale backdated to January 1, Triangle stands to reap $1.6 million in a cash benefit from the field's production for the first half of the year.
Triangle managing director Rob Towner told Energy News the junior had been circling the Cliff Head opportunity for several months, and had been talking to operator Fosun for about that long.
"Recently we asked again what was happening, because it had been tied up with another group and didn't seem to be moving. We had the cash from out Pase sale, and we conducted out due diligence in three days, and we were able to finalise an offer very quickly," he said.
Cliff Head, which is located 10 kilometres offshore, was the first and so far only commercial field discovered and developed in the offshore basin.
It has produced almost 15 million barrels over the past decade, and still has an estimated 10 years of life left in it, with production rates exceeding forecasts.
Production is still 1300 barrels of oil per day.
There has been an apparently disconnect between the desires of AWE, which is keen to push ahead with the Waitsia gas field development in the onshore basin, and Fosun International (42.5% and operator), which has seen a lack of investment in the near-field potential for the past several years.
Towner told Energy News that there were no immediate plans for a new capital raising for Triangle because there is no pressing need to invest heavily in Cliff Head, but he said there were options to extend the life beyond the forecast end date of 2021.
"We have the money left over for this asset, and I know studies have been done over the years, but I don't think they would be of interest until the oil price recovers," he said.
The entry of a new party could eventually see a renewed focus on the field, and Towner said one of the key selling points is the opportunity to maximise use of the wellhead platform and the Arrowsmith production facility over time.
He said there is a "regional synergy potential" with neighbouring small oil discoveries and exploration blocks, but he would not be drawn on any plans to look at onshore and offshore opportunities in the basin.
Triangle hopes to finalise the agreement by June 30, a short turn around considering Elixir had been in the wings since last October.
The junior will fund the acquisition from current cash reserves.
"Oil prices are at the lowest that we have seen for many years but the price volatility in the commodity markets is a constant factor and periods of uncertainty can present short to medium term opportunity," Towner said.
The field has a break-even point of around $US35/bbl.
Triangle sold its interest in the Pase PSC earlier this year, and since that time worked on its 100%-owned Reids Dome gas licence in Queensland while looking for other opportunities.
It sold Pase for a $4.2 million payment and is in line to secure up to $US7 million in cost recovery payments and $US25 million in production royalty on any new developments within the PSC.
Production
Towner says the Cliff Head purchase will allow Triangle to rejoin the ranks of producers.
There are around 3.8MMbbl still to recover from Cliff Head, and there are immediate options for workovers, infill wells and other modest improvements for the field.
There are also a few small fault blocks on the reprocessed 3D seismic that they think might add incremental barrels, plus step-out and appraisal opportunities.
While the production licence is relatively small, there is some exploration potential, such as the West High area or the Updip Mentelle prospect, close to where the Mentelle-1 well was drilled in 2005.
There are also two leads to the south-west which could be drilling targets.
Drilling could take place from the existing platform.
Tamarind
Towner also quashed rumours, spread over the weekend, that Malaysian oiler Tamarind Energy, was directly involved in the deal.
The $US800 million company, backed by the world's largest alternative investment firm Blackstone, with $US300 billion in assets under management, was last year linked to a potential bid for various Santos interests and had previously been linked with Fosun when the Chinese company initially expressed an interest in ROC Oil Company, then operator of Cliff Head and now part of Fosun.
Towner told Energy News there is a connection: Tamarind CEO Ian Angell has been acting as an advisor to Triangle during the hunt for new assets.
