Santos exercises Melbana Beehive acquisition option
Melbana Energy Limited (ASX:MAY) has been notified by Santos Limited (ASX:STO) that it exercises its option to acquire a 40% interest in the Permit, WA-488-P, the Permit containing the Beehive prospect.
Meanwhile, TOTAL E&P Australia Exploration Pty Ltd that it has decided not to exercise its option to acquire a 40% interest in the permit. TOTAL’s option therefore expires with immediate effect.
As a consequence of TOTAL’s decision (pursuant to the terms of the option agreement), Santos’ option is now modified such that it may now acquire an 80% interest in the permit in return for funding 100% of the costs for an exploration well in the permit area.
Santos now has a month, until 4 December 2019, to exercise the modified option. If it chooses not to, Santos will not acquire any interest in the permit and Melbana’s interest in will remain at 100%.
The Beehive prospect has been assessed by Independent Expert McDaniel & Associates to contain a best estimate prospective resource of 388 million barrels of oil equivalent (which has been prepared using the probabilistic method).
Melbana Energy’s Chairman, Andrew Purcell, said:
“Santos’ recently announced decision to acquire the northern Australian assets of ConocoPhillips, consistent with its aim to be a leading regional LNG supplier, make it a particularly exciting time for the energy sector in northern Australia.
“There is a great deal of interest from industry in these developments and we are confident that our Beehive prospect has a role to play there given other recent regional successes, its shallow water position close to existing infrastructure and the increased confidence in the prospect resulting from the newly processed 3D seismic survey acquired by Santos and TOTAL.
“We are sorry not to have the opportunity to continue to work with TOTAL given the excellent relations that have developed between our respective teams during the course of this study, but look forward to continuing to work closely with Santos and any partner they may wish to introduce to replace TOTAL.”
Given that that Santos have committed to buy ConocoPhillips out of northern Australia, and have said that it is looking to farm down some of this acquisition it will be interesting to see whether Melbana will form part of this general farmout.
Today's news follows Santos, along with Total, having completed their technical assessment of Beehive in the last quarter, assisted by the use of the new 3D seismic data received earlier this year. Overall resolution of the Beehive isolated platform has improved with sharper, better defined, near vertical edges providing more confidence in structural closure.