Melbana granted extra time for Beehive work obligations

Australian offshore regulator has granted Melbana Energy the approval to suspend the deadline for completion of the current WA-488-P permit year work obligations by 12 months.

Melbana
Energy said on Friday that its application for a 12-month suspension of the
work program conditions in respect of Permit Year 3 was approved by the National
Offshore Petroleum Titles Administrator (NOPTA).

According to
the company, the suspension for the WA-488-P permit came with a corresponding
extension of the permit term.

As a result,
Permit Year 3 now ends on 21 December 2021 and the permit term will end on 21
December 2023.

This is not the first time Melbana received a suspension for this particular permit. Namely, NOPTA approved Melbana’s deadline suspension for completion of Permit Year 3 work obligations by 15 months back in September 2018.

Completion
of work obligations, which include drilling an exploration well on the permit, was
suspended until 21 December 2020.

As for the
permit, WA-488-P contains the giant Beehive prospect – a carbonate build-up
that has been independently assessed to have a prospective resource of 388
million barrels of oil equivalent (best estimate).

A 3D seismic survey has been completed over the prospect and considerable progress has been made on planning and permitting for an exploration well.

Melbana
stated that Beehive has the potential to open a new, possibly very large, play
type in Australian waters.

It is worth noting that Santos allowed its option to acquire an interest in Melbana’s Beehive permit lapse in March this year.

Santos and
Total each had an option to acquire a 40 per cent share in the Beehive permit.
However, Total last November decided not to proceed with the acquisition, which
gave Santos an option to acquire an 80 per cent interest in return for funding
100 per cent of the costs for an exploration well in the permit area.

Initially,
Santos had until early December 2019 to exercise the modified option, which was
exercised. However, the deal was conditional on Santos finding a partner to
take a share of Santos’ 80 per cent.

Since Santos
was not able to conclude a farm-out with a third party, its option to acquire the
80 per cent interest, in return for agreeing to fund the drilling of one
exploration well in the permit, expired. Therefore, Santos no longer had any
right to acquire an interest in the permit.

Melbana,
with its 100 per cent interest in the permit, is in discussions with potential
partners to join it in drilling a Beehive exploration well. So far, it has not
been able to find any.

At the time,
Melbana did reveal its intent to seek an extension to its obligation to drill
an exploration well by December of this year to align with expected rig
availability in 2021.