EOG Australia takes over Beehive prospect from Melbana

Oil and gas company Melbana Energy has sold its WA-488-P permit, which holds the Beehive prospect located offshore Australia, to EOG Resources Australia.

In April this year, Melbana and EOG Resources entered into a sale and purchase agreement (SPA) for the sale of the WA-488-P permit. Melbana reported on Wednesday that the sale of the WA-488-P permit – containing the Beehive prospect – to EOG Australia was completed.  The company also confirmed a receipt of the initial purchase price of $7.5 million.

This transaction is EOG’s first Australian venture. The firm will start work relatively soon, as the WA-488-P permit has a commitment well required no later than 21 August 2023. As previously reported, EOG plans to drill an exploration well on the prospect in 2022.

Under the terms of the sale agreement, EOG Resources will make contingent additional payments to Melbana totalling $5 million, subject to EOG Australia making certain future elections in regard to the WA-488-P permit area.

Furthermore, Melbana is entitled to payments of $10 million per 25 million barrels of oil equivalent (boe) that may be sold and delivered from within the WA-488- P permit area in the future. The company opted not to use any payments for any projects in Cuba.

Originally, the Beehive prospect was estimated to contain 388 million boe on a best estimate basis and as much as 1.6 billion boe. However, Melbana revised these estimates to 416 million boe (best estimate) and 1.4 million boe (upper estimate) following its assessment of the 3D seismic data acquired across the prospect.

Located near Eni’s producing Blacktip gas field, in a water depth of 40 meters, Beehive is considered to be one of the largest undrilled hydrocarbon prospects in Australia. It is analogous to the giant Tengiz field in the Caspian basin, which is also a Carboniferous isolated carbonate build-up.

Andrew Purcell, Melbana Energy’s Executive Chairman, commented: “It is tremendously exciting for all of us here at Melbana (and, as we have learned, for many other observers) that the Beehive prospect identified and championed by our geoscience team is finally going to be tested. This play type, untested in Australia, has been responsible for some of the world’s great hydrocarbon discoveries so we wish EOG Australia every success in its preparations for and execution of the exploration well they are planning to drill.”

Melbana has two more petroleum exploration permits nearby, where it holds a 100 per cent interest. The two licenses designated WA544-P and NT/P87 are adjacent to the Beehive permit. These contain the undeveloped oil discoveries Turtle and Barnett and the company is currently conducting geoscientific studies over these permit areas.