SENEX Energy and BG Group subsidiary QGC have signed an asset swap agreement which will see the pair exchange interests in gas exploration tenements located in Queensland’s Surat basin.

Under the terms of the tenement transfer agreement, Senex will transfer its minority interest in eastern Surat Basin permits PL 171 and ATP 574P2 to the QGC joint venture.

In exchange, the QGC JV will transfer its 100 per cent interest in, and operatorship of, western Surat Basin permits ATP 795, ATP 767 and ATP 8892 to Senex.

No cash consideration is payable by any party in respect of the tenement transfers.

The QGC JV permits are adjacent to Senex’s existing western Surat Basin assets ATP 771P and ATP 593P and form the basis of the Western Surat Gas project.

On completion of the transaction, Senex will hold net 2P gas reserves of 488 petajoules.

Senex managing director Ian Davies said the asset swap positioned Senex as part of the solution to the looming gas shortage in domestic and export markets.

“This is a win-win transaction,” he said.

“Combining the QGC JV’s western Surat Basin assets with our own western Surat Basin acreage gives Senex the scale required to build a material Surat Basin gas business on our own terms.

“The arrangement also enables QGC and its partners to focus on the eastern Surat assets to the benefit of the greater QCLNG project.”

Senex plans to invest up to $40 million from existing financial resources in the Western Surat Gas project over the next three years, targeting commencement of pilot testing in 2015/16 and moving to an investment decision on commercial production as soon as appraisal results support it.

Mr Davies said the deal was a perfect example of its growth strategy in action.

The transaction, which is subject to Foreign Investment Review Board, Queensland Government, and other regulatory approvals, is expected to be completed by mid-December.