Sale of Beehive Prospect

Source: 4/23/2021, Location: Not categorized

- Sale of WA-488-P to a subsidiary of EOG Resources, Inc. EOG intends to drill an exploration well targeting the Beehive Prospect in 2022.
- Houston based EOG is a Fortune 500 company with an enterprise value of US$32 billion. In 2020 it produced the equivalent of more than 275 million barrels of oil. This transaction is EOG’s first Australian venture.
- Consideration payable for the sale:
? An upfront payment of US$7.5 million, subject to satisfaction of Conditions Precedent
? Contingent payments of US$5.0 million, subject to EOG making certain future elections with regards to the permit following completion of the exploration well
? Production linked payments of US$10.0 million for each 25 million barrels of oil equivalent produced, in the event of a commercial discovery NB: An independent expert appointed by Melbana has estimated the Prospective Resource of the Beehive Prospect to be 416 million boe1 (Best Estimate) up to 1.4 billion boe (High Estimate)2
- The sale of WA-488-P to an experienced and well-resourced party such as EOG delivers upfront cash and an interest in any future production without exposure to the cost of appraising and developing a discovery.
- Full ownership retained of adjacent permit areas, WA-544-P and NT/P87, containing the undeveloped Turtle and Barnett oil discoveries.

Melbana Energy Limited is pleased to announce that its wholly owned subsidiary, Finniss Offshore Exploration Pty Ltd (Finniss), has entered into a sale and purchase agreement (SPA) to sell its WA-488-P permit (Permit) to EOG Resources Australia Block WA-488 Pty Ltd, a wholly owned subsidiary of EOG Resources, Inc. (NYSE: EOG).

Under the terms of the SPA, subject to satisfying certain conditions precedent, EOG Australia will acquire a 100% interest in the Permit, an approximately 700 square km 3D survey and an extensive amount of 2D seismic coverage.

The Conditions Precedent include:
? various usual regulatory approvals for a transaction of this type;
? approval to suspend and extend the remaining permit obligations to allow additional time to drill the initial exploration well; and
? no objection to the proposed acquisition from the Foreign Investment Review Board.

EOG Australia intends to drill an exploration well targeting the Beehive Prospect in 2022. Finniss would receive the following payments in consideration for its sale of the Permit:
? US$7.5 million upon satisfaction of the conditions precedent.
? US$5.0 million in contingent payments
- 50% payable contingent on EOG Australia entering the final year of the exploration permit (the current commitment for which is the drilling of another well)
- 50% payable contingent on EOG Australia being awarded a production licence in the Permit.
? future payments of US$10.0 million for each 25 million barrels of oil equivalent produced, sold and delivered by EOG Australia from the Permit area.

Melbana Energy’s Executive Chairman, Andrew Purcell, said:
“We are very pleased to have reached this agreement with a company of the calibre of EOG and look forward with great enthusiasm to the drilling of the first exploration well into the exciting Beehive Prospect. This transaction allows Melbana to retain significant exposure to the upside of a potential Beehive discovery without being exposed to the costs of offshore appraisal and development, which can be expensive and challenging for a junior oil and gas company.

The testing of this new and exciting play type in Australia, responsible for some of the world’s largest hydrocarbon discoveries, is what all the years of effort have been for and we are heartened that such an experienced and well-resourced company as EOG, known for being ahead of the curve when it comes to identifying new areas, will be responsible for the final stage of this journey. We are also appreciative of the time and energy invested by our friends at Moyes & Co., an oil and gas upstream advisory firm, who helped with this transaction.”

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