Asset A&D

Talon to Acquire Macallum's Interests in the Perth Basin Muchea Lead

By Shivangi Jain
January 20, 2021
3 minutes read
Gas Flare

ASX-listed Talon Petroleum Ltd. has entered in to a non-binding term sheet with privately-held mining & energy company Macallum Group Ltd. to acquire its 100% working interest in and operatorship of the Muchea lead (spanning across EP 494 and SPA-0081) located in the Perth basin in Western Australia.

Under the terms of the agreement, the consideration payable to Macallum will be comprised of A$90,000 in cash payable at the time of execution of the term sheet, with an additional A$243,000 becoming payable upon execution of formal agreements by way of issuance of 54,000,000 Talon shares. Additionally, upon completion of Talon’s initial exploration work and upon the election to proceed with final acquisition of the Muchea lead, Talon shall make a contingent payment of A$350,000 by way of issuance of such number of Talon shares valued at the 30-day VWAP for Talon shares up to and including the date of satisfaction of the conditions precedent, and grant Macallum a 1.95% overriding royalty (ORRI) on production from the Muchea lead.

The contingent payment shall be payable upon completion of the Talon’s initial exploration work over SPA-0081 and upon the company electing to proceed with final acquisition of the lead, subject to standard conditions including execution of formal agreements and receipt of all required regulatory approvals and registrations. A termination fee of A$100,000 shall be payable should Talon elect not to proceed with the final acquisition of the Muchea lead, after completion of the company’s initial exploration work.

The Muchea lead spans over EP 494 and SPA-0081 located onshore in the Perth basin in Western Australia. EP 494 contains 35 blocks covering an area of approximately 2,577 sq. km, and was originally awarded to Macallum in May 2015. The lead provides significant follow-up potential in the event of 2021 drilling success at the company’s Perth basin flagship project, Walyering gas field (EP 447). Further geophysical surveying will be needed to determine whether the lead can be matured for drilling, but initial mapping shows a high relief structure up to 80 sq. km in size. Initial work plans on the lead include airborne AEM-PTP survey over SPA-0081, which is estimated to cost A$100,000.

“This is a very exciting Perth basin portfolio addition, again targeting conventional sandstone reservoirs. The Muchea lead identified by Talon has the potential to be matured into the region’s largest undrilled, Jurassic, wet gas prospect. The structuring of the transaction provides Talon with the ability to undertake low-cost initial exploration work to better understand the potential of Muchea while progressing to drill our maiden Perth basin well at Walyering. At Walyering we will be appraising an existing Jurassic, wet gas discovery. Securing Muchea with 100% interest provides Talon with significant upside to any success at Walyering,” said Talon’s Managing Director, David Casey.

Perth-based Talon is engaged in exploration and development operations in the UK North Sea and Perth basin in Australia. Macallum is engaged in the acquisition, exploration, development and production of mineral resources in Australia, including oil, gas, iron ore, zinc and silver.

The transaction is subject to customary closing conditions, including execution of formal agreements and receipt of all required regulatory approvals and registrations.

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