Beach Petroleum Limited (“BPT”) has moved to a 50% stake in the Basker-Manta- Gummy (“BMG”) oil and gas fields in the Gippsland area of Bass Strait. The Company had exercised its option to acquire from Anzon Australia Limited a further 12.5% interest in the fields at a cost of A$50 million, to take its holding to 50%. It is the second major play into the project for Beach Petroleum this year, having in August increased its interest to 37.5% from its original 25% stake in BMG, the Company’s first offshore oil production project in Australia.
The remaining 50% is held by Anzon, which also acts as Operator of the BMG Joint Venture.
“The move will increase Beach’s Proved and Probable oil reserves by 3.8 million barrels and add nearly 1 million barrels of oil to its anticipated 2006/07 production” Beach Petroleum’s Managing Director, Mr Reg Nelson, said. “On current oil price values, this will add around A$70 million per year to Beach’s gross revenue,” Mr Nelson said. “We have great confidence in this project and in the ability of Anzon, as Operator, to maximise its value. We expect that revenue from Basker-Manta-Gummy will provide a strong base for Beach’s further growth.”
The acquisition will be funded from a combination of existing cash reserves, Beach’s strong cashflow and debt.
The Basker and Manta fields have Proven and Probable (2P) recoverable oil reserves of 30.1 million barrels (mmb). In addition, a contingent gas/condensate resource of 19.2 million barrels of oil equivalent (mmboe) has been identified in the Manta and Gummy Fields.
The Basker-2 well moved last month to an Extended Production Testing (EPT) regime – using a combination of the Crystal Ocean FPSO (Floating Production, Storage and Offtake vessel) and oil transfers to the 650,000 barrel capacity Basker Spirit tanker moored 1.5 kilometres away, for storage and subsequent sale. Mr Nelson said that Basker-2 was currently producing at around 10,000 barrels of oil a day – a rate he described as “highly pleasing and on target”. First oil sales are expected in mid January.
Terms of acquisition
The terms of the acquisition announced, which move Beach Petroleum from its 37.5% interest to half project ownership, include:
1. Effective Date: 1 January 2006
2. Payment of A$20 million on 13 January 2006
3. Payment of A$30 million on 28 February 2006
4. Payment of a US$2.50/bbl royalty on 12.5% share of total production above 30.1 million barrels.
5. Beach will also be responsible for future capital and operating costs associated with the 12.5% interest from the effective date.
6. In addition to its direct interest in the BMG project, Beach Petroleum also owns a direct 9.6% equity stake in Anzon.
2006 development drilling schedule
The Joint Venture will shortly commence a full field development drilling program, which will see four further oil development wells drilled over the next 6 months and lead to the commencement of full field production in the third quarter of 2006. The first of these, Manta-2, is scheduled to spud in mid January.