AWE exits VIC/P67 Joint Venture

Australian energy company WHL Energy Limited has received notification from Peedamullah Petroleum (AWE) stating it will not proceed as part of the VIC/P67 Joint Venture. 

The VIC/P67 permit is located in the Otway Basin, offshore Australia and it contains the undeveloped La Bella gas discovery and multiple near-field exploration targets.

WHL Energy previously identified 14 prosects with total best estimate Prospective Resources of 1,044 Bcf of gas and 31.2 MMbbls of condensate and LPGs.

During October 2014, WHL Energy Limited started a farm-out process for VIC/P67 to seek a carry through the exploration drilling phase while retaining meaningful exposure to the permit. WHL Energy says that a data room was opened and strong interest was received from several pre-qualified companies, with the process expected to extend through the first quarter of 2015.

WHL Energy adds that it remains engaged with a number of these companies.

“WHL Energy’s position remains that the strong demand for domestic gas on the east coast of Australia due to the growth in LNG exports together with the conventional VIC/P67 Prospective Resources could provide a cost competitive gas supply to these markets,” the company said.

David Rowbottam commented: “While it is disappointing that AWE has elected to withdraw at this time. WHL Energy understands that many companies in the industry have reviewed their capital expenditure plans given current commodity pricing. The Company is confident that the VIC/P67 asset has significant value and that as a result of our higher equity position the ability to retain value is enhanced. The Company also notes that any future joint venture arrangement or asset transaction will be simplified as an outcome of this decision and that AWE does not have any further claim against potential recovered costs.”

Under the terms of a separate farm-out agreement executed with Tap Oil Limited, Tap has an option to acquire an initial 10% interest in VIC/P67. WHL Energy notes that while Tap is not required to exercise the seismic option until 10 days after AWE’s confirmed decision, the payment of up to $2.95 million remains a firm commitment.

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