EOG intends to drill an exploration well targeting the Beehive prospect in 2022

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Beehive is one of the largest undrilled hydrocarbon prospects in Australia. (Credit: C Morrison from Pixabay)

Melbana Energy, through its subsidiary Finniss Offshore Exploration, has entered into a sale and purchase agreement (SPA) to sell its WA-488-P permit, which comprises Beehive prospect, to EOG Resources.

Located in nearly 40m water depth, Beehive is one of the largest undrilled hydrocarbon prospects in Australia.

The acquisition includes nearly 700km2 3D survey and an extensive amount of 2D seismic coverage.

Under the terms of the SPA, EOG Australia will make an upfront payment of $7.5m to acquire 100% stake in the permit, subject to satisfaction of certain conditions.

The conditions include customary regulatory clearances, approval to suspend and extend the remaining permit obligations and no objection from Foreign Investment Review Board.

Finniss is entitled to receive additional $5m in contingent payments, based on EOG Australia entering the final year of the exploration permit, and obtaining a production licence.

Also, EOG Australia will also make future payments of $10m for every 25 million barrels of oil equivalent produced, sold and delivered from the permit area.

Melbana Energy executive chairman Andrew Purcell said: “We are very pleased to have reached this agreement with a company of the calibre of EOG and look forward with great enthusiasm to the drilling of the first exploration well into the exciting Beehive Prospect.

“This transaction allows Melbana to retain significant exposure to the upside of a potential Beehive discovery without being exposed to the costs of offshore appraisal and development, which can be expensive and challenging for a junior oil and gas company.

“We are also appreciative of the time and energy invested by our friends at Moyes & Co., an oil and gas upstream advisory firm, who helped with this transaction.”

EOG to drill an exploration well targeting Beehive Prospect in 2022

EOG is focused on becoming a low-cost, high-return and low-emissions producers, and play significant role in the long‐term future of energy.

The company intends to drill an exploration well targeting the Beehive prospect in 2022.

According to an independent expert appointed by Melbana, the prospective resource of the Beehive prospect is estimated to be 416 million boe up to 1.4 billion boe.

The prospect is also located close to existing facilities, including Ichthys project and Blacktip field.