Origin to Farm-in to 2 Unconventional Gas Blocks in Cooper-Eromanga Basin

Origin Energy Limited (Origin) revealed Monday the signing of two farm-in agreements with Senex Energy Limited to acquire exploration interests in two unconventional gas blocks covering more than 733 square miles (1,900 square kilometers) of South Australia’s prospective Cooper-Eromanga Basin.

The two gas blocks (Area A and Area B*) comprise a number of prospective sub-basins within the Cooper-Eromanga Basin - including the Allunga, Nappamerri and Patchawarra troughs - and provide exposure to multiple unconventional play types including tight sands, shale and deep coal seams.

Following completion of the farm-in agreements, which is expected by around June 30, Origin will progressively invest $87 million (AUD 97 million) to contribute to an exploration program on each gas block (Stage 1). Upon their completion, Origin will hold a 40 percent participating interest in Area A and a 30 percent participating interest in Area B.

Origin will then have the option to increase its working interest in both blocks by 10 per cent via an additional $64 million (AUD 72 million) investment to contribute to a pilot appraisal program in each area (Stage 2). In the event Origin elects not to exercise this option, the company would continue to hold its existing participating interests.

Senex will retain operatorship of Area A and Area B with Origin defining the technical inputs to the work programs. After completion of the pilot appraisal programs Origin would have the option to become operator in each area.

Origin CEO Upstream, Paul Zealand said, “The two farm-in agreements represent an attractive opportunity through which Origin can greatly increase its upside exposure to unconventional gas opportunities in one of the most attractive gas regions in eastern Australia.

“Through Origin’s longstanding investment in the Cooper Basin Joint Venture, we have gained a detailed understanding of gas exploration and development potential in the Cooper-Eromanga region. The new farm-ins provide an exciting opportunity through which we can leverage these skills and expertise.

“We are pleased to be working with Senex Energy given its proven track record operating in one of Australia’s largest onshore hydrocarbon provinces,” Zealand said.

The agreements are subject to certain approvals including registration of interests.

*Origin’s interest in Area B covers the Permian section and all underlying strata only.

Transaction Details

The following table summarises Origin’s contribution and interest earned under the farm-ins.

Area A

  • Farm-out areas: 1,031 square kilometers (255,000 acres)
  • Origin contribution to Stage 1 work program: $58 million (AUD 65 million)
  • Participating interest earned by Origin: 40 percent
  • Origin contribution to optional Stage 2 work program: $35 million (AUD 40 million)
  • Participating interest earned by Origin: 10 percent
  • Total Participating interest at the end of optional Stage 2: 50 percent
  • Total Origin contribution to work programs: $94 million (AUD 105 million)

Area B

  • Farm-out areas: 904 square kilometers (223,000 acres) (Deeps only)
  • Origin contribution to Stage 1 work program: $28 million (AUD 32 million)
  • Participating interest earned by Origin: 30 percent
  • Origin contribution to optional Stage 2 work program: $28 million (AUD 32 million)
  • Participating interest earned by Origin: 10 percent
  • Total Participating interest at the end of optional Stage 2: 40 percent
  • Total Origin contribution to work programs: $57 million (AUD 64 million)

Total

  • Origin contribution to Stage 1 work program: $87 million (AUD 97 million)
  • Origin contribution to optional Stage 2 work program: $64 million (AUD 72 million)
  • Total Origin contribution to work programs: $151 million (AUD 169 million)

The signatories to Area A agreement are Origin Energy Resources Limited and Senex subsidiaries Victoria Oil Exploration (1977) Pty Ltd and Stuart Petroleum Pty Ltd.

The signatories to Area B agreement are Origin Energy Resources Limited and Senex subsidiary, Stuart Petroleum Cooper Basin Oil Pty Ltd.



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