REY RESOURCES is considering the next move in its acquisition of a 50 per cent stake in a Canning basin exploration permit, after Western Australia’s State Administrative Tribunal (SAT) dismissed an appeal by block partner Oil Basins.
Rey had agreed to acquire private company Backreef Oil’s stake in exploration permit (EP) 487, on the condition that the SAT proceedings were resolved to its satisfaction.
The permit for EP 487, which covers a 506,200 hectare area surrounding the town of Derby, was granted on 14 March 2014 by the WA state government to Backreef and operator Oil Basins.
The grant of the permit followed an agreement Backreef signed in 2012 to sell its 50% stake, once granted, to Buru Energy for $3.5 million.
Oil Basins argued that the sale agreement meant Backreef had assigned its interest in the yet-to-be-granted permit to Buru – saying this meant Backreef ’s presence on the permit was “wrongly existing’ as it no longer held the title.
The appeal to the SAT claimed Backreef did not hold the title and that the company was unable to satisfy the conditions of the permit as it no longer had the legal capacity to do so.
However, SAT president Justice Jeremy Curthoys dismissed these arguments, noting that the transfer of the stake required Ministerial approval under the Petroleum and Geothermal Energy Resources Act 1967.
This was noted in the sale agreement itself as well as being spelled out in sections 72 and 75 of the Act, he said.
“Since s 72 and s 75 both require Ministerial approval for a transfer of the title, the Sale Agreement is to be read as conditional on such approval,” the judgement found.
It was implicit in the agreement that the title would remain in Backreef ’s hands until such approval was received, Justice Curthoys added.
As it was not, the sale agreement did not have the effect Oil Basins claimed, and as such, the granting of the stake to Backreef was valid.
Backreef has since signed a deal to offload its stake in the permit to Rey Resources for $2 million – with the company announcing in January it would assume both the conduct of Backreef ’s SAT proceedings as well as its costs.
The deal with Buru lapsed at the end of 2014 by mutual agreement of the companies.