Triangle Energy (Global) Limited (ASX:TEG), an experienced oil producer and explorer, owns (78.75%) and operates the first commercial oil operations of the Perth Basin, its flagship project Cliff Head, in Western Australia.
The other key assets owned by the Company are TP/15 Xanadu exploration permit (45% stake) and ASX-listed State Gas Limited (ASX:GAS), in which TEG owns a 32.71% stake, valued at $17.7 million, almost double the current market capitalisation of $9.38 million of the Company.
Apart from these assets, Triangle Energy in October last year completed a farmout agreement to acquire a 50% stake in the Production Licence L7(R1) containing the Mt Horner Field in the onshore Perth Basin.
The L7 licence spreads over the Allanooka Terrace in the North Perth basin and south of Geraldton. The Mount Horner oilfield had produced ~1.7 million barrels of oil, outperforming the expectations for the oilfield; however, the ageing infrastructure and significant water production requiring extensive dewatering led to the seizure of the operations in 2011.
In June 2017, AWE Limited (a subsidiary of Mitsui), signed an agreement to sell the L7 permit to Key Petroleum, with the deal completed on approval from the regulatory bodies. The sale included complete reimbursement of the decommissioning and rehabilitation costs of up to $1.9 million.
Oil at the Mount Horner asset is understood to be produced mostly from the Jurassic level with immense oil opportunity in the Permian and Triassic prospectivity in the northern part of the basin. A huge prospecitvity of oil can be expected given that the region has been overlooked and seeks exploration.
Bright Opportunities Ahead for Triangle Energy: Read Here
In October 2018, Key Petroleum and Triangle Energy entered into a farmout agreement, as part of which the latter intended to acquire a 50% stake in the Production Licence L7(R1). The Company also reserves the right to take the operatorship of L7.
Some of the key conditions of the farmout agreement are as follows-
- Completion of a 3D seismic of at least 50 square kilometres and a drilling program (farm-in program) of at least two new wells;
- Sole funding of up to US$3 million for the execution of the farm-in program, with further optional funding requirements on behalf of the other JV partner;
- In return, Triangle Energy will recover the farm-in program expenses upon the commencement of operations and is entitled to 87.5% of the production for the first 2 years of the commercial production and 75% thereafter until the entire farm-in and carried amount is fully recovered.
Triangle Energy targets Higher Oil Throughput: Must Read
Mount Horner Fits Perfectly in TEG Portfolio
On close coordination with Tamarind Resources Pte Ltd, the Company’s technical advisors, Triangle Energy has already identified potential for additional reserves at Mount Horner. The impressive historic production further reduces the project risks linked to L7.
The L7 Mount Horner fits perfectly in the Company’s portfolio, as TEG’s strategy is focused on exploring for additional reserves within already proven oil fields, similar to Cliff Head. The project redevelopment can be escalated easily due to the brownfield nature.
The joint venture of Triangle Energy and Key Petroleum via their subsidiaries is working towards taking a decision regarding the farmout work program and budget. Moreover, they intend to commence planning activities concerning a 3D seismic survey for the field.
TEG last traded at a price of $ 0.026 each share on 30 March 2020.
Interesting Read: Triangle Energy Releases Half Yearly Update, Average Production Rate at ~800b/d
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