MEO AUSTRALIA will allow an unnamed third party to farm-in to three of its permits, as it announced its withdrawal from the Blackwood gas discovery, offshore the Northern Territory.
The agreement gives the third party, which MEO described as an “international exploration company,” the option to acquire a 30 per cent interest in any of the WA 488 P, AC/P50 and AC/P51 permits.
In return, the third party must fund 30% of the forward expenditure in the permits.
In the case of WA 488 P, provisions also exist for the third party to acquire a further 10% stake in return for funding a 3D seismic study over the permit’s Beehive prospect.
In addition, another 40% stake was available should the third party procure full funding for the drilling of its proposed Beehive 1 well.
If completed, this would see MEO free-carried through to the drilling of the first well, retaining a 20% participating interest in the permit, located in the Petrel sub-basin.
However, the third party can withdraw from the permit if there have been no moves to fund its future permit work program at least four months before the end of permit year 3.
MEO said the third party had exercised its initial option to farm-in to the 30% stake, subject to final board approval.
Once this had been approved, and a farm-in agreement executed, the third party would be named, MEO said.
The third party is also currently conducting a technical assessment of AC/P50 and AC/P51 – which contains the Ramble On prospect. It has an option to withdraw from them if a permit renewal process, set to take place later this quarter, results in an unfavourable outcome.
At the same time, MEO announced it would withdraw from the Blackwood gas discovery, transferring that portion of NT/68 to Eni Australia at no cost.
MEO’s recently-appointed managing director Peter Strickland said the company had assessed the resource available on the field was too small to underpin the development of the Tassie Shoal Methanol project.
“The value of the resource to MEO is insufficient to warrant incurring further costs,” he said.
“Consequently, we are exercising commercial discipline by withdrawing from Blackwood and focusing our efforts on the Heron gas discovery.”