Santos gives up on taking interest in Melbana’s Beehive permit

Australian energy giant Santos has allowed its option to acquire interest in Melbana’s Beehive permit lapse, prompting Melbana to look for other partners.

The WA-488-P permit, located offshore Australia, contains the Beehive prospect.

Melbana Energy said on Wednesday it had been advised by Santos that it had not concluded a farm-out of an interest in the permit by March 4, 2020 – the deadline by which it was required to do so.

To remind, Santos and Total each had an option to acquire a 40 percent 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% interest in return for funding 100% of the costs for an exploration well in the permit area.

At first, Santos had until December 4, 2019, to exercise the modified option. Come December and Melbana informed that Santos had “validly and conditionally” exercised its option to acquire the 80% stake. However, the deal was conditional on Santos finding a partner to take a share of Santos’ 80%.

As Santos has not concluded the farm-out with a third party, its option to acquire athe 80% interest, in return for agreeing to fund the drilling of one exploration well in the permit, has expired. Therefore, Santos no longer has any right to acquire an interest in the permit.

As a result, Melbana now has a 100% unencumbered 100% interest in the permit. It is in discussions with potential partners to join it in drilling an exploration well in the Beehive prospect – a process that is greatly assisted by the high quality 3D seismic survey undertaken in 2018 by Total and Santos and the significant preparatory work that has been completed to date.

Should Melbana be successful in attracting new partners to assist it with the drilling of an exploration well in the Beehive prospect, it intends 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.

Melbana has also started work on reassessing its volumetric assessment of the prospective resource in the Beehive prospect and its interpretation of other possible plays in the Permit area using the newly acquired 3D seismic survey.

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