In exchange for the transfer, 3D Oil will receive a $5 million payment in recognition of previous permit expenditure. ConocoPhillips will undertake the acquisition of a 3D seismic survey of no less than 1580 square kilometres within the permit, with 3D Oil relieved of making any financial contribution.
ConocoPhillips Australia East president Nick McKenna said the agreement reinforced the company’s commitment to ongoing operations in Australia and would leverage the company’s global and Australian offshore exploration knowledge and experience.
“If exploration is successful and the field were to move to production, our intention would be to supply the gas to the Australian east coast domestic gas market,” McKenna said.
The farmout agreement is conditional upon the signing of a joint operating agreement and regulatory consents.
After processing and interpretation of the survey, ConocoPhillips Australia may elect to drill an exploration well.
Exploration permit T/49P is in the eastern Otway basin, west of King Island, and covers an area of 4960 square kilometres. This activity is currently planned to be undertaken in the third quarter of 2020.
In the event ConocoPhillips Australia elect to drill such exploration well, 3D Oil will be carried for up to $US30 million ($43.8 million) in well costs after which it will contribute 25 per cent of well costs in line with its interest in the permit.