Shale players target Cooper basin
Activity in Australia’s emerging Cooper basin shale-gas play has shifted up a gear
Two separate deals will see unconventional-gas firms positioning themselves to tap the potentially lucrative sector.
UK-based BG Group has emerged with a 9.4% stake in local firm Drillsearch Energy, one of the fastest-expanding local shale-gas players. BG’s Australian offshoot, Queensland Gas (QGC), says it will take up an option to buy 31.6 million Drillsearch shares for A$19.6 million ($20.7 million), providing funding for Drillsearch’s shale-gas and wet-gas exploration campaigns.
The move forms part of an earlier deal under which BG will earn a 60% stake in Cooper basin exploration acreage held by Drillsearch. The pair established a strategic venture last July to develop unconventional shale and tight-gas resources in Drillsearch’s ATP940P licence.
QGC has committed to spending A$130 million over five years on the exploration and pilot production-appraisal programme, with a view to using gas in its expanding eastern Australian business – potentially including its $16 billion Queensland Curtis liquefied natural gas project in Gladstone.
Drillsearch's share price has rallied strongly since October, rising from around A$0.45, to close at A$1.035 on 1 February, valuing the company at about A$300 million.
So far, BG is the only foreign investor in the Cooper basin shale-gas play, with ConocoPhillips focusing on Western Australia’s Canning basin and Hess on the remote Beetaloo, basin in Northern Territory.
Elsewhere, fellow Cooper basin shale-gas explorer Senex Energy, in which BG also has a stake, has farmed into an unconventional-gas exploration campaign operated by minnow Orca Energy. Orca agreed to sell a 22% share of its PEL115 license to Senex in exchange for Senex paying its share of costs for an exploration well to be drilled later this year. Senex will also take a 19.99% cornerstone stake in Orca by investing A$4 million.
Under the deal, Senex will carry Orca’s costs for a dedicated unconventional gas exploration well to be drilled in PEL115 later after Senex’s three planned wells in its wholly-owned PEL516 permit, where drilling is under way.