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Tap Oil Increases its Interest in WA-351-P

Source: 1/20/2011, Location: Not categorized

Tap Oil Limited has exercised its pre-emptive right to acquire an additional 20% interest in the highly prospective WA-351-P exploration permit in Western Australia's Carnarvon Basin.

This unique opportunity for Tap to increase its interest in this strategic permit arose as a result of Tap's right under the joint operating agreement to pre-empt Roc Oil (WA) Pty Limited's sale of its 20% interest in WA-351-P to Woodside Energy as announced to the ASX on 20 December 2010.

Tap will acquire the additional participating interest from Roc Oil (WA) Pty Limited for a cash consideration of US$15.75 million, increasing Tap's holding in the exploration permit from 25% up to 45%. BHP Billiton Petroleum (North West Shelf) Pty Ltd will retain a 55% interest and is the Operator. The acquisition by Tap is subject to relevant government approvals.

The acquisition and additional participating interest will be funded from existing cash reserves.

Tap's Managing Director and Chief Executive Officer Troy Hayden said:

"We see WA-351-P as being one of three priority or core assets in our portfolio, alongside Thailand and Ghana. Thus, Roc Oil (WA) Pty Limited's sale agreement with Woodside Energy Ltd provided us with a unique opportunity to exercise our pre-emptive right and improve the leverage in one of our most prospective projects.

WA-351-P offers significant leverage to large potential gas resources at a time when there is competition between several LNG players to find gas for their expansion plans.

Moving to 45% provides Tap with a large enough stake in the project to have several options available in the near future, including the ability to farm down to an incoming party for a promoted interest in future drilling programs and still retain a material stake in the permit."

Prospectivity of WA-351-P

The Operator completed a detailed assessment of the plays, prospects and leads in the permit in 2010 including the 3D seismic acquired in 2008. Over 10 leads and prospects were defined in the Triassic Mungaroo Formation which Tap estimates have a combined estimated mean potential of 2-3 Tcf (gross recoverable) of natural gas. Tap considers that a number of these targets have an estimated probability of success over 50%.

Additional leads have been identified in WA-351-P in the Jurassic and Early Cretaceous, both of which are productive elsewhere in the Carnarvon Basin. Current indications are that this shallower potential is larger but higher risk than the Triassic in this permit. Further work will be done on these objectives.

The high chance of success is reinforced by Hess' reporting of 13 gas discoveries from 16 exploration wells drilled to date in the adjacent WA-390-P permit, immediately north of WA-351-P. Hess has commenced a multi-well appraisal program in WA-390-P.

Under the terms of the exploration licence, an exploration well is required to be drilled before 5 June 2013.

The proximity of WA-351-P to many large-scale liquefied natural gas (LNG) projects being developed should provide the joint venture with many options for the commercialisation of any gas discoveries.

WA-351-P Joint Venture Participants – Post Acquisition

Tap (Shelfal) Pty Ltd 45%; BHP Billiton Petroleum (North West Shelf) Pty Ltd (Operator) 55%

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