JOHANNESBURG (miningweekly.com) – Oil and gas producers Santos and Drillsearch have entered into five agreements covering permits and assets in the Cooper basin in South Australia.
The companies have entered into a binding agreement to establish a joint venture (JV) over two permits held by Drillsearch in the Cooper basin.
Under the terms of the agreement, Santos will farm-in to permits PEL106A and PEL513, for between A$100-million and A$120-million to acquire a 60% interest in, and operatorship of, both permits.
This will be supported by a gas sales agreement covering production through to 2025. Santos will buy Drillsearch’s additional 40% share of production from both permits, adding to its existing portfolio of East Coast sales gas.
Santos VP for Eastern Australia James Baulderstone said the agreement provided Santos with liquids-rich permits with excellent near-term potential, and that its agreement with Drillsearch demonstrated the company’s continued focus on developing and supplying additional gas into the eastern Australian market from 2014.
Further, Santos will also increase its oil exploration acreage in the Cooper basin and has agreed to buy a 25.84% interest in the PEL100 permit from Drillsearch for $15-million.
It would also farm-in for 50% of Drillsearch’s 66.6% interest in the ATP549P West permit.
In turn, it would sell a 29% interest in the ATP299 permit, as well as associated production licences, to Drillsearch for $36.8-million. Drillsearch will hold a 40% interest in the permit, with Santos to retain a 60% stake.
Drillsearch noted that the increase in its interest in the permit would provide an immediate increase in oil production of about 150 000 bbl/y.