Apache Energy is set to farm-in to the Canning Basin, signing a $25 million agreement to earn a stake in oil and gas exploration permits held jointly by Buru Energy and Mitsubishi Corporation.
Apache has entered into binding agreements with the joint venture to earn a 50 per cent stake in three separate exploration permits and up to a 50 per cent stake in another permit, known as the Coastal permits, in exchange for funding a $25 million exploration program.
Apache will also be granted the option to earn up to a 40 per cent interest in four other permits and up to 50 per cent in another, known as the Acacia permits.
The permits are prospective for shale oil and gas as well as for conventional sandstone reservoirs.
Buru will remain the operator of the Coastal and Acacia permits but Apache will have the right to become the operator subject to completion of the relevant work programs.
"This farm-in by Apache is an excellent result and we are delighted that Apache have agreed to join us in the Canning Basin," Buru managing director Keiran Wulff said.
"This farm-out will provide a welcome refocus and impetus for the exploration of what is another major asset in our portfolio."
Apache will pay the joint venture a non-refundable option fee equal to the greater of $7.2 million or 80 per cent of the costs of a 20,000 square kilometre aerogravity survey currently being conducted by Buru and Mitsubishi.
If Apache exercises the option to acquire interests in the Acacia permits, it will fund 80 per cent of the costs of the first two exploration wells and appraisal wells.
Both transactions are subject to approval from the Foreign Investment Review Board, as well as other regulatory approvals.
Mines and Petroleum Minister Bill Marmion said the announcement was a positive step towards future exploration in the area.
"The Canning Basin is considered to hold significant natural gas from shale, which to date remain largely under-explored due to the remote location of the basin," Mr Marmion said.
"Further exploration of these areas is key to confirming these resources which could potentially secure our state's energy security for many decades to come."
Buru shares closed the day's trade 3.7 per cent lower at $1.56.
