Magellan Petroleum Corp., Portland, Me., is in the midst of rationalizing its Amadeus basin assets in central Australia and plans to renew its exploratory program there.
Magellan will acquire Santos Ltd. entities’ interests in Palm Valley and Dingo gas fields and transfer Magellan’s Mereenie oil and gas field interest to Santos, retroactive to July 1, 2011. Santos will buy the remaining 25.65 petajoules of Palm Valley gas reserves from Magellan over 17 years.
The gas sales contract is subject to completion of the asset swap. The contract will start on the later of the first delivery of gas by Mereenie to a new gas customer and Jan. 16, 2012, which is when the existing gas sales agreement for Palm Valley field expires. The price will be the weighted average of the prices obtained for all gas sold by Santos entities from Mereenie field in the relevant contract year.
Mereenie and Palm Valley were discovered in the mid-1960s with main reserves being in the Ordovician Pacoota reservoir just below the Horn Valley formation now being explored. Reserves are in the Cambrian Arumbera formation at Dingo, found in the 1980s.