Option period triggered for Total and Santos to farm into Beehive permit
Following the receipt and approval of the final processed data from the Beehive 3D seismic survey off Australia, Total and Santos now have six months to exercise option to farm-in and drill the first exploration well on the prospect.
Melbana Energy, the operator of the project, said on Wednesday that the final processed data from the Beehive 3D seismic survey undertaken during August 2018 had been received from the processing contractor, quality checked, and accepted as the final data set by Total, Santos, and Melbana.
From a contractual perspective, the acceptance of the processed survey data as the final data set has triggered the contractual start of a six-month “option period” whereby Total and Santos each have an option, exercisable together or individually, to acquire a direct 80% participating interest in the permit in return for fully funding the costs of the first exploration well in the permit, which is planned to be the Beehive-1 exploration well.
If the option is exercised, Melbana will be fully carried on all costs incurred from the time the option is exercised until 90 days after the rig is released after drilling this well.
Drilling in 2H 2020
The option to farm-in and drill the first exploration well is exercisable at any time by Total and/or Santos, but no later than six months from the date when the final data set was delivered. If the option is exercised, drilling is anticipated in the second half of 2020, with Melbana estimating the cost of the Beehive-1 exploration well to be within the $40-$60 million range.
Melbana Energy’s CEO, Robert Zammit, said: “The triggering of the contractual six-month option period is a milestone in Melbana’s commercial arrangement with Total and Santos for Beehive, which is the largest undrilled hydrocarbon prospect in Australia.
“Under the agreement reached with Total and Santos in December 2018, commencement of drilling planning work has been accelerated into the first quarter of this year and is progressing, including drafting of an environment plan, well concept identification and commencement of rig selection to ensure readiness for drilling in the second half of 2020 in the event the option is exercised by Total and/or Santos.”
Beehive is located close to several existing facilities including Ichthys project and Blacktip field and pipeline offering several options for future gas monetization. In the event of a commercial discovery, Melbana will repay carried funding from its share of cash flow from the Beehive field. Melbana will have no re-payment obligations for such carried funding in the event there is no commercial discovery and development in WA488-P.
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