Vintage Energy has executed a binding Heads of Agreement with Firetail Energy Services for it to become a joint venture partner in the EP126 permit (onshore Bonaparte Basin, Northern Territory). Under the terms of the agreement, Firetail will earn a 10% interest in EP126 through the provision of $850,000 of services for the testing of Cullen-1, the total cost of which is currently estimated at $3.2 million. This contribution by Firetail, and the formation of the joint venture, places considerable value on the EP126 permit and its exploration potential. Vintage will retain a 90% interest in the permit and operatorship.
Firetail is a well-respected provider of services to the oil and gas industry in Australia and will value add to the joint venture through its relevant experience and access to equipment. Subject to receiving all the necessary regulatory approvals,ministerial approval of the farm-in and satisfaction of conditions precedent, the joint venture plans to test the Cullen-1 well prior to the wet season this year.
This testing will take place over four zones in a thick section of carbonates,which are interpreted to exhibit natural fractures and vuggy porosity, an occurrence of large, irregularly shaped pore spaces that can reservoir oil and gas. Encouraging gas shows were observed during the drilling of Cullen-1, which the previous operator cased and suspended for future testing. A positive result from the test would likely lead to further seismic acquisition and exploration/appraisal drilling. The conditions precedent of title transfer registration (Beach Energy to Vintage) and entering into a services agreement with Firetail,are expected to be fulfilled in the coming weeks.
In addition to this carbonate play, there is also a basin margin play for algal build-ups (reef carbonates) within the Ningbing Limestone.Similarly, toward the margins of EP126,there is potential for an oil play in the younger up-dip sandstones of the Weaber Group. A seismic survey would further define these play concepts and assist in delineating any favourable structural traps for drilling.
Should exploration in the permit be successful, there are a number of potential routes to market, including local industrial users for any oil, gas and/or condensate discovered in commercial quantities.In addition to operational planning, Vintage has commenced preparing the requisite regulatory requirements to operate and undertake on-ground activities in the permit. Vintage is looking forward to working withour new joint venture partner, Firetail, and the Department of Primary Industries and Resources (DPIR), the Department of Environment and Natural Resources (DENR), the Northern Territory Environmental Protection Authority (NTEPA), the traditional landowners and all other stakeholders in relation to this prospective permit.
Managing Director, Neil Gibbins said: 'This joint venture with Firetail is an excellent outcome for Vintage and is consistent with our strategy. The partnership will provide the expertise and access to well testing equipment required to realise the potential of the EP126 permit. This joint venture,along with the progress being made on the regulatory front in the Northern Territory to encourage responsible exploration, has moved this exciting project a number of steps closer to being realised.'