Cooper Energy disclosed Monday that it has agreed to purchase a 65 percent interest in the Basker/Manta/Gummy gas and liquids project (BMG) in the offshore Gippsland Basin, Australia through acquisition of a 65 percent interest in each of the production licenses: Vic/L26; Vic/L 27; and Vic/L28. Cooper Energy will also be appointed Operator for the project. As a result of the acquisition, Cooper Energy will have the majority interest in a significant gas and liquids resource considered likely to be a competitive conventional source of gas supply for eastern Australia in the coming years. The acquisition, which is effective from Jan. 1, is subject to regulatory approval.

The BMG project contains undeveloped liquids-rich gas and oil which Cooper Energy intends to review and quantify to include in its year-end review and estimate of reserves and resources. The project comprises the Basker oil and gas field, Manta oil and gas field and the Gummy gas discovery in the licenses Vic L26, Vic /L27 and Vic L28 located 40 miles (65 kilometers) offshore Victoria in water depths ranging from 492 feet (150 meters) to 1,148 feet (350 meters).

Cooper Energy is to acquire its 65 percent stake through acquisition of:

• a 50 percent interest from ROC Oil Company Limited (ROC) for consideration of $0.92 million, or AUD 1 million (plus working capital adjustments which will be negligible) and a deferred payment of $4.62 million (AUD 5 million) contingent on first hydrocarbons production from a commercial development; anda 15 percent interest from Beach Energy Limited (Beach)As a part of the acquisition Cooper Energy will assume any abandonment liability for the interests being purchased. This equates to 39 percent of any abandonment liability in the period to October 2018 and then 65 percent of any abandonment liability thereafter.
• The BMG joint venture equity structure following the completion of the agreement will comprise Cooper Energy (65 percent interest and Operator) and Beach (35 percent interest).
• The BMG fields were previously developed for oil production (which included gas production and re-injection) and have been in a non-productive phase since 2010. The infrastructure not required for a subsequent gas and liquids development and production phase has been removed. The infrastructure relevant to produce gas and the remaining oil, including sub-sea facilities, has been retained and maintained.

Cooper Energy Managing Director David Maxwell said BMG’s proximity to existing infrastructure and developed and undeveloped gas fields was favorable for the prospects of commercialization and consistent with the company’s gas strategy.

“The eastern Australian gas market is developing as we anticipated, the gas supply outlook is becoming increasingly tight and the upstream gas prices are increasing. We believe that the BMG joint venture has the right features for a new foundation economic gas supply to the eastern Australian gas customers in the medium term” he said.

Maxwell noted “BMG is a conventional gas source, with some infrastructure in place and the potential for economic enhancement through coordination with adjacent developed and undeveloped fields. We believe BMG can be a highly competitive source of supply for gas customers and good business for shareholders at recent and anticipated gas prices.”

Cooper Energy’s BMG interest is complemented by its 22.9 percent shareholding in Gippsland Basin explorer Bass Strait Oil Company Limited (BAS), which holds a number of permits in close proximity to BMG.

“The Gippsland Basin is, and has long been, the largest source of gas supply for eastern Australia customers” said Maxwell. “Its significance can be expected to grow in the coming years as eastern Australia gas customers seek new competitive sources of supply with the right volume, price and delivery timelines for emerging contract needs”.

Cooper Energy’s Gippsland Basin interests are a part of the strategy to build a portfolio of gas assets that are well positioned for competitive supply to gas users. Cooper Energy also holds licences in the onshore Otway Basin where it is currently engaged in a two well program to assess the gas potential of the onshore Penola Trough.

Maxwell said the near term focus at BMG would be on evaluating development options and determining the optimal plan for the fields’ next stage of development as a gas project. BMG’s annual operating costs are currently approximately $6.47 million (AUD 7 million) per annum (100 percent basis) which includes maintenance of the existing sub-sea infrastructure and permit management.