Beach has signed a formal agreement with a private company, Territory Oil and Gas Pty Limited (TOAG), to earn up to a 90% interest in TOAG's onshore Bonaparte Basin areas, EP 126 and EPA 138, as well as up to a 55% interest in the offshore areas EPA 135 and NTC/P 10.
Beach and TOAG believe these highly prospective areas to be underexplored due to the lack of good quality modern seismic and other geophysical data. Working petroleum systems have been identified and confirmed by: strong hydrocarbon shows in the few exploration wells drilled to date; oil seeps identified at surface; oil staining and live oil observed in cores drilled for other minerals; and the Weaber gas field situated within but excluded from the acreage.
The permits are prospective for both conventional oil and gas within the Milligans Formation, the Ningbing Group as well as other structures and formations, and unconventional gas and liquids in the Milligans Formation. The Milligans Formation comprised of organically rich and thermally mature shales and other lithologies represents a rich source facies which is likely to be prospective for liquids in the onshore part of the basin.
For the onshore permits, Beach may earn up to a 90% interest by funding a three phase work program with a minimum of two phases over the next two years. The phased program will include an aeromagnetic/gravity survey and two deep wells to be drilled on targets identified by the geophysical surveys. The farmin drilling expenditure will be capped at an estimated cost of $13 million per 25% equity interest earned in each phase. Under the terms of the agreement, Beach will earn 25% for each of these three phases with the option to earn a further 5% interest on each phase by funding beyond the capped amount, should TOAG choose not to contribute when the cap is reached. After each of the first two phases, Beach has the option to remain at the interest earned at that time, with each party contributing from that point onward at this equity interest.
For the offshore permits, Beach will earn a 50% interest by funding a seismic survey, with the option to earn a further 5% by funding beyond a capped amount should TOAG choose not to contribute when the cap is reached.
This agreement represents a firm commitment by Beach of up to $5 million for geophysical surveys, and on the exercise of the various drilling and other options referred to above, up to $36 million. Under the terms of the agreement, the first phase of farmin work will be completed by the end of 2012 and the second phase by the end of the following year.
This area of the Bonaparte Basin held by TOAG is considered to be a logical fit with Beach's strategy of taking early and material acreage positions in prospective unconventional and conventional oil and gas areas.
Through its alliance with Somerton Energy (Somerton) and under the terms of the TOAG agreement, Beach has the right, to assign a portion of its interest in this farmin to Somerton.
The agreement also allows Beach to take up to a 15% equity stake in TOAG, should the company become publicly listed.
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