AUSTRALIAN oil and gas explorer Senex Energy and the QGC joint venture completed the proposed Surat basin gas asset swap transaction.

Senex obtained 100 per cent interest in and operatorship of three QGC joint venture western Surat basin permits in exchange for its minority interests in QGC operated eastern Surat basin gas permits ATP 574 and PL 171.

In a statement Senex said no cash consideration was payable by any party in respect of the tenement transfers.

The company’s new acreage is adjacent to Senex’s existing western Surat basin permits ATP 771P and ATP 593P and forms the core of the company’s Western Surat Gas project.

The transaction resulted in Senex recognising a net increase of 56 million barrels of oil equivalent (mmboe) over proved and probable reserves (2P) at 30 June 2014, now holding net 2P gas reserves of 83 mmboe.

Senex said the company is progressing planning and appraisal activities in the western Surat to achieve an early investment decision on a commercial gas project over its acreage.

Pilot production is expected to start as soon as possible but no later than the end of 2017, with early appraisal results to inform the larger scale investment decision.

Up to $40 million of capital expenditure has been committed by Senex for the project’s first three years of tenure.

Minimal expenditure is expected in the financial year 2015 as initial activities will focus on planning to safeguard the success of the project.

Senex managing director Ian Davies said “The completion of this transaction is a milestone in Senex’s longer term strategy to capitalise on the strength of Australia’s east coast gas market. We expect to see unprecedented demand growth resulting in supply pressures and strong gas pricing.”

“The Western Surat Gas project is ideally located to capitalise on this opportunity, situated within the proven hydrocarbon province of the Surat basin and with extensive infrastructure adjacent to the acreage,” he said.

The reserves of the QGC joint venture permits received under the gas asset swap have been independently assessed by Netherland, Sewell and Associates.