EOG Enters Australia, Acquires Beehive Prospect from Melbana
NYSE-listed EOG Resources Inc. has entered into a Sale and Purchase Agreement (SPA) with Finniss Offshore Exploration Pty Ltd., a wholly-owned subsidiary of ASX-listed Melbana Energy Ltd., to acquire a 100% interest in exploration permit WA-488-P (containing the Beehive Prospect), offshore Australia, for an upfront consideration of US$7.5 million, plus certain contingent and production-linked payments. The transaction represents EOG’s first Australian venture.
Under the terms of the SPA, EOG Resources Australia Block WA-488 Pty Ltd., a wholly-owned subsidiary of EOG, will acquire a 100% interest in the exploration permit for an upfront payment of US$7.5 million, payable upon satisfaction of customary closing conditions. In addition, EOG shall make contingent payments of US$5.0 million, with US$2.5 million payable upon EOG Australia entering the final year of the exploration permit, and the remaining US$2.5 million payable on EOG Australia being awarded a production license in the permit. Further, EOG Resources shall make future payments of US$10.0 million for each 25 million barrels of oil equivalent (MMboe) produced, sold, and delivered from the permit area, in the event of a commercial discovery.
WA-488-P covers an area of approximately 4,085 sq. km in the Bonaparte Basin, situated off the northeast coast of Western Australia. Awarded in May 2013, the permit contains the multi-billion barrel Beehive Prospect in water depths of approximately 40 m. The permit includes approximately 700 sq. km of 3D seismic survey, as well as an extensive amount of 2D seismic coverage. EOG intends to drill an exploration well targeting the Beehive Prospect in 2022. The gross prospective resources attributable to the Beehive Prospect are estimated to be up to 1.4 billion barrels of oil equivalent (Bboe).
“We are very pleased to have reached this agreement with a company of the calibre of EOG and look forward with great enthusiasm to the drilling of the first exploration well into the exciting Beehive Prospect. This transaction allows Melbana to retain significant exposure to the upside of a potential Beehive discovery without being exposed to the costs of offshore appraisal and development, which can be expensive and challenging for a junior oil and gas company,” commented Andrew Pucell, Executive Chairman of Melbana Energy.
Headquartered in Houston, EOG is engaged in the exploration, production and development of oil and natural gas properties in Texas, New Mexico, Oklahoma, North Dakota, Utah, and Wyoming in the United States, and also has international operations in Canada, China, Trinidad & Tobago, and the United Kingdom.
Melbourne-based Melbana Energy has a portfolio of upstream assets in Australia, New Zealand and Cuba. In addition, Melbana also holds a 100% interest in the Tassie Shoal Methanol project and the Tassie Shoal LNG project located in shallow waters of the Timor Sea, offshore Australia.
Moyes & Co. is acting as the financial advisor to Melbana Energy.
The transaction is subject to customary closing conditions, including regulatory approvals, approval to suspend and extend the remaining permit obligations to allow additional time to drill the initial exploration well, and no objection from the Foreign Investment Review Board to the proposed acquisition.