PERTH (miningweekly.com) – ASX-listed explorer Central Petroleum and its joint venture (JV) partner Total have agreed to increase the expenditure on the Stage 1 exploration of the South Georgina gas project, straddling Queensland and the Northern Territory, by $35-million to $95-million.

The JV is effectively bringing forward expenditure planned for Stage 2 and Stage 3. Total expenditure for the four-year exploration programme remains unchanged at $190-million.

Stage 1 – for which $60-million had originally been budgeted – covers initial exploration activities on three of the permits in Queensland and one application in the Northern Territory.

The exploration programme started in the second half of this year and, to date, some 974 km of seismic has been recorded on the Queensland permits, with a number of core wells planned for April next year.

Exploration in the Northern Territory would not get under way until a title has been granted.

Under the initial JV agreement, some $48.5-million of the $60-million funding would be spent on the Queensland permit, with the balance going towards the Northern Territory application. Under that agreement, Total was also set to fund the first 80% of the costs, with Central Petroleum footing the rest.

Under the new Stage 1 spend, the additional $35-million funding would go towards the Queensland permits.

Central Petroleum told shareholders on Thursday that the structure of the JV also remained unchanged, with Total having the option to attain operatorship, and hold a 68% working interest in the permits, once this total expenditure was reached.

The increase in the Stage 1 expenditure meant that the JV deal would likely reach its completion before the end of Stage 3, and would allow for multi-zone production tests at some of the wells, subject to the results from initial ore hole exploration.

Undertaking the production tests would also increase the JV’s understanding of the project area’s unconventional gas potential.

Meanwhile, Central Petroleum has deferred the timing of its own 20% commitment for the Stage 1 programme, with its $7-million share in the increased expenditure targeted for mid-2015.

The deferred payment terms of the additional funding could change if at least two-thirds of the company’s listed options, due to expire in March next year, were exercised. In this event, Total and Central Petroleum would contribute concurrently to Stage 1 expenditure, in excess of the first $48.5-million.