Santos conditionally exercises option on Beehive-1

By Trevor Hoey. Published at Dec 5, 2019, in Energy

In a promising development for Melbana Energy Limited (ASX:MAY), Santos Limited (ASX:STO) has validly and conditionally exercised its option to acquire an 80% interest in the Permit containing the Beehive prospect.

The parties agree that upon the satisfaction of the conditions Melbana will transfer an 80% interest in the permit in return for the transferee(s) funding 100% of the cost of the Beehive-1 well.

Santos is in active discussions with several parties with respect to participation in the Beehive-1 exploration well and these discussions are ongoing.

As such, it has been agreed that Santos is not required to submit an application for the transfer of an interest in the permit until it has successfully concluded a farm out for some of its right to acquire that interest.

Santos working on rig availability

Santos has also indicated that the work it has done on identifying rig availability suggests the drilling of the Beehive-1 exploration well would possibly not occur prior to the end of the current permit year (December 2020).

As such, an application for an extension to the current permit year should be made subsequent to Santos successfully farming out some of its participating interest in the permit.

Melbana has agreed to allow Santos until March 4, 2020 to complete a farm-down of its right to acquire an 80% interest in the permit.

If the farm-down is successful, the parties would then collaborate to secure the necessary extension to the current Permit year to align the drilling of the Beehive-1 well with rig availability.

Should Santos be unable to conclude a farm-down by March 4, 2020, or if it is not possible to subsequently extend the permit year, the exercise of the option will not become unconditional and will expire and Melbana would retain a 100% interest in the permit.

Santos agrees to fund environmental permit

In consideration for Melbana affording Santos more time to conclude a farmdown, Santos agrees to complete at its expense an application for an environmental permit (EP) for the drilling of the Beehive-1 exploration well.

This commitment by Santos to produce an EP, along with its identification of a firm rig slot for drilling the well, should assist with the application for any extension request to the current Permit year.

Melbana would remain free carried for its 20% interest in this exploration well should the above conditions be satisfied and the option exercise becomes unconditional.

Targeting upper end prospective resource of 1.6 billion BOE

Underlining the potential transformational impact that Santos’ involvement would have should the prospective resource be proven, Melbana chairman Andrew Purcell said, “Santos' decision to farm-down its large equity interest in Beehive is entirely consistent with its recently stated strategy of optimising its portfolio through acquisitions, disposals and farm-outs, particularly in northern Australia where it is working to reduce its equity in the Barossa Field and Darwin LNG to 50% or less.

‘’We’re pleased to continue to work co-operatively with Santos given the commitment they’ve shown to Beehive - a prospect with 388 million barrels of oil equivalent (BOE) of prospective resource (best estimate) and potentially 1.6 billion BOE of prospective resource (high estimate) which, if proven, would prove transformative for each of our companies and for northern Australia.

‘’This variation to our agreement with Santos takes us a critical step closer to drilling the largest undrilled structure in Australia.”

View Our Investment Portfolios

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why is Australia’s leading small cap publication

Founded seven years ago, is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise. provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more. is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!