Beach Energy Limited (Beach), through its wholly owned subsidiary Beach (USA) Inc., has entered into an agreement with Sundance Energy Inc. a wholly owned subsidiary of Sundance Energy Australia Limited (Sundance) to acquire an approximately 18.5% net revenue interest in lease area Section 25 being part of Sundance’s South Antelope oil prospect in the Bakken shale of North Dakota in the USA.
The drilling of a horizontal well targeting this prospect is scheduled to begin in late May 2010. Following completion of this first well, Beach has the opportunity to further develop its alliance with Sundance by participating in a second horizontal well on an adjacent lease area. The combined gross potential reserves for the two wells is in excess of 1 million barrels of oil.
This strategically focused investment will give Beach first hand experience of the rapidly evolving technology associated with oil and gas production from shale formations.
The cost to Beach of joining the exploration program will be approximately US$1.3 million.
Beach has quickly developed into one of Australia’s first shale explorers with shale and other unconventional petroleum exploration targets in the Otway Basin and the Gippsland Basin, each in Victoria. Beach is already a major player in conventional oil and gas production in the Cooper Basin but is moving to develop the potential large shale gas resources of the Cooper Basin, with a major focus on overpressured, gassy shales in its dominant position in the Nappamerri Trough.
Beach's Chief Executive Officer, Hector Gordon said "this is the first example of how Beach's alliance with Sundance will help provide us with the technical know how needed to develop unconventional resources in the Cooper Basin – and elsewhere".
The company is also aiming to strengthen relationships with contractors and major shale exploration players in the US so as to be able to apply that knowledge to develop its now extensive unconventional petroleum portfolio.