Santos today announced the final approval of the $490 million Fletcher Finucane oil project in the Carnarvon Basin, offshore Western Australia, and an increase in its equity interest after buying out joint venture partner Tap Oil.
Santos will pay $18 million to buy out Tap, plus reimburse Tap's project costs incurred since July 1st 201, taking its interest to 48 per cent.
Other participants in the project are Kufpec Australia and JX Nippon OIl & Gas.
The Fletcher Finucane oil project will be developed through a three well sub-sea tie back to the existing Santos-operated Mutineer Exeter floating production, storage and offloading facility.
First oil production is expected in the second half of 2013, at an estimated average gross production rate of 15,000 barrels per day for the initial 12 months.
Santos chief executive David Knox said the development approval of Fletcher Finucane had come six months after the discovery of the Finucane South field, reflecting a rapid transition from exploration to development.
Santos vice president WA&NT John Anderson said Fletcher Finucane not only gave Santos additional oil production from 2013 but extended the economic life of Mutineer Exeter and gave the partners scope to pursue other opportunities within tie back distance of the existing facilities.
“New oil production from Fletcher Finucane will extend the economic life of Mutineer Exeter by up to four years and it will give the Fletcher Finucane and Mutineer Exeter participants more time to examine other opportunities within tie back distance of the existing facilities,” he said.
Fletcher Finucane's gross proved and probable reserves are estimated at approximately 14 million barrels.
In an announcement to the share market today, Tap Oil's managing director, Mr Troy Hayden advised that Tap's $21 million interest in Santos had been sold due to an inability to negotiate a satisfactory outcome between all participants of the Mutineer Exeter joint venture.
Mr Hayden said, "While we would have preferred to develop the project and generate a return for oil production, this was not possible despite extensive negotiations with the Mutineer Exeter joint venture.
The proceeds from this sale bolster Tap's cash reserves ahead of a year of productive exploration and development activity, commencing with the prospective Tallaganda-1 well in the WA-351-P permit with BHP Billiton as Operator.