Key Petroleum Ltd., Perth, and AWE Ltd., Sydney, have agreed binding terms for Key’s acquisition of AWE’s 100% interest in production licence L7 (R1) in the onshore North Perth basin, which contains Mount Horner oil field.
The deal also provides an option for AWE to farm into 50% of Key Petroleum’s 40% interest in offshore north Perth basin permit WA-481-P, a huge exploration permit that lies next to Cliff Head oil field. The permit, which lies in 5-200 m of water, encompasses the oil and gas discovery at Dunsborough and gas discoveries at Franklin and Perseverence.
AWE sold out of Cliff Head in June 2016 to the current operator Triangle Energy (Global) Ltd., but if it takes up Key’s option it will mark the company’s return to the offshore Perth basin (OGJ Online, June 20, 2016).
The terms of Key’s acquisition of licence L7 include an upfront payment to Key of $380,000 (Aus.). In addition, as much as $1.9 million will be made available for reimbursement to Key for rehabilitation costs at Mount Horner. Once the transaction is complete Key will assume operatorship of the field as well as all liabilities.
The associated option agreement enables AWE to acquire half of Key’s interest in the WA-481-P permit, exercisable any time for a period of 12 months from the date of execution of the agreement.
AWE will pay a $75,000 (Aus.) option fee to Key that will allow AWE access to all data gathered in WA-481-P.
If AWE exercises the option, AWE will carry Key for its remaining equity (20% of the permit) or reimburse Key for as much as $150,000 (Aus.) for the Year 5 work program and up to $100,000 (Aus.) for the Year 6 work program.
Key says the acquisition of the currently inactive Mount Horner field will enable any discoveries it makes in adjoining onshore permit EP437 to be potentially fast-tracked to development via the Mount Horner infrastructure in conjunction with the possible reactivation of production at Mount Horner itself.
Key expects to drill the exploration well Wye Knot-1 close to the boundary of L7 later this year.
The company adds that if AWE decides to enter WA-481-P this will bring a high level of expertise in the Permian age reservoirs to the joint venture given AWE’s success in onshore Waitsia field and the company’s offshore geological insights at Cliff Head and further north in the Houtman sub-basin.