CARNARVON Petroleum has acquired a stake in a Barrow basin oil project from INPEX Corporation, agreeing to pay future drilling costs on the project.
Operated by Quadrant Energy, Retention Licence TR/3 offshore Exmouth contains the previously discovered Blencathra oil resource, as well as WA 155 P, containing the Outtrim 1 oil discovery, and WA 486 P.
In an announcement, Carnarvon said the project aimed to uncover sufficient oil resources to underpin a field development, with the result of the planned Outtrim East 1 well central to that strategy.
Quadrant will retain a 65 per cent operating stake in the project, while Carnarvon will take the remaining 35% stake under the agreement, announced in late January.
With Quadrant aiming to drill the well in June this year, Carnarvon has agreed to pay 35% of drilling costs, estimated at about $10 million, as well as some funds to the vendors.
INPEX said the sale of the stake, which it had acquired in 1999, would help it optimise its global asset portfolio – though any impact on its financial results would be limited.
Speaking with Oil & Gas Australia, Carnarvon managing director Adrian Cook said the opportunity had a strong upside potential for what he said was a relatively modest investment.
Carnarvon had been using pre-existing subsurface data in planning new investments in the North West Shelf, which came after the company had decided to off load a series of overseas assets, he said.
“What we try to do is to look at all the data and put it together and ignore who owns what permits on the top surface. Once we see a play type that has merit we can come to the top and see if there is a commercial position that can be taken.”
“We think that looks like a pretty interesting area with some new play types that are worth testing. We are now up to 11 blocks – so the march is on, well and truly.”
Mr Cook said that the well commitment was key to Carnarvon’s decision to buy-into the asset.
“We don’t want to simply sit on cash because that’s not going to generate value, but you don’t want to spend it all and then ask for more in what is a pretty tight market,” he said.
He added that there were two other potential resources near the new discovery, which if successful, could be tied together into a larger development.