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Triangle Energy (Global) Limited (ASX:TEG) has entered into a farmout deal with fellow Australian oil junior Key Petroleum (ASX:KEY) in order to acquire a 50% stake in the Mt Horner oilfield situated in Perth Basin in Western Australia. After the announcement made this week, Rob Towner, the managing director of Triangle said that the company was looking for a suitable mature field asset in the basin that would match its resources – be it infrastructure or people.
The company is running the Cliff Head oil field in the Perth Basin for the past two and a half years. Since then the prices of oil has gone up from $45 to $50 per barrel.
Mr. Towner also stated that technical reviews on Mt Horner is already complete. This was the project which the company wanted to get involved.
As per the agreement, if Triangle funds $3 million in farm-in work program then only it will enjoy the interest in the production at L7. If the cost exceeds the given limit, then it will be equally shared between the joint venture partners. According to this plan, a 3D survey will be conducted to do a seismic survey in the area of range 50km2. Also, it will include the drilling program of two or more new wells.
In addition, the early work program will be commenced by the joint venture which will include the thorough examination of existing wells at Mt Horner. This program will be funded in the ratio of 50:50 after which it is expected that drilling and seismic program will run.
Once the farm-in and early work program gets completed, the company has option to undertake L7’s operatorship. As per the terms and condition, after the drilling of the farm-in wells is over, the company will recover the payback amount by claiming 87.5% of L7 production for the first 2 years of commercial production.
Thereafter, the company will be authorized to get 75% of L7 production till the recovery of payback amount is done.
All activities related to the cost, commissioning, decommissioning of existing Mt Horner wells will be taken care by Key. Also it was agreed that decommissioning costs will be shared by both parties entered into joint venture only in case of any future infrastructures and wells.
The performance of the company since inception was -68.40%. The one year and 5 years performance of the company is -49.03% and -68.40% respectively.
The current market price of the share is A$0.08 with market capitalization of A$17.23 million. The group also released its quarterly activities’ report and moved up 1.266% on November 01, 2018.
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