WHL Energy Limited announced that the formal farm-out process has commenced on its VIC/P67 oil and gas permit, which contains the La Bella gas and condensate asset, in the offshore Otway Basin off the Victorian coast.
The decision to move to a formal farm-out process for VIC/P67 follows receipt of strong industry interest to participate in the future development of the permit.
WHL Energy has opened a data room in Perth, providing potential farminees with access to data covering past exploration and studies by previous operators as well as new work undertaken by WHL Energy.
The farm-out process is expected to run over the next 2-3 months.
Commenting on the official opening of farm-out negotiations, WHL Energy Managing Director Mr. Steve Noske said the Company has already fielded strong interest from a number of high quality, potential farm-in candidates.
"La Bella's known gas and condensate reserves, their location in close proximity to key infrastructure and rapidly growing gas markets, and the exploration upside within the permit, makes VIC/P67 a very attractive asset for any company that wants to be part of a relatively easy to develop, ideally located, high value project," Mr. Noske said.
The opening of official farm-out discussions for VIC/P67 and La Bella follows WHL Energy's ASX announcement of August 28 that it had closed tenders for the acquisition of 313 square miles (811 square kilometers) of 3D seismic over the permit area.
Mr. Noske said the plan to fast-track acquisition of 3D seismic over VIC/P67 is part of the work WHL Energy is undertaking or currently planning that will ensure that the Company and its shareholders obtain the best value from what the Company believes is a high value asset.
WHL Energy is also in discussions with a leading international subsea engineering and construction firm with regard to the undertaking of concept development studies.
"Our internal studies have shown that La Bella is a financially robust development opportunity, with a strong NPV and a quick rate of return on investment. We will now look to confirm that through independent consultants confirming the volumetric and development concept assumptions."
Mr. Noske confirmed that a decision on what form a farm-out agreement may take and how much equity WHL Energy may retain will be finalised during the farm-out negotiation process.
Background VIC/P67 – 100% (La Bella), Otway Basin, Offshore South East Australia
WHL Energy was formally awarded Exploration Permit VIC/P67 by the Commonwealth – Victoria Offshore Petroleum Joint Authority. VIC/P67 contains the La Bella gas field discovery and several other nearby gas prospects and leads.
Located approximately 124 miles (200 kilometers) WSW of Melbourne, VIC/P67 benefits from its proximity to existing development infrastructure, including the Santos operated Casino development, the Origin operated Otway gas project, the BHPB operated Minerva development and TRU Energy's Iona gas plant.
Concept studies based on a tie-back of La Bella to the various local infrastructure options have already been undertaken, and have provided very robust returns.
The undeveloped La Bella gas field is assessed by WHL Energy to contain 2C Contingent Resources of 158 petajoules (PJ).
"WHL Energy, its industry peers and Australian energy analysts have repeatedly stated that there is a strong likelihood of a significant gas shortage in the near to mid-term on the east coast of Australia," Mr. Noske said.
VIC/P67 contains a number of exploration leads, with the relatively low risk prospects present at Highlander and West La Bella providing additional tie-back opportunities to a potential La Bella development. Larger potential leads, at higher risk, are also present within the La Bella area, including the Lowlander Leads, which offer additional significant upside potential.
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