Santos and Total in WA farm-in deal

Energy company Santos and French multinational Total have agreed to fund a 3D seismic survey, thought to be worth around $45 million, over Melbana Energy's Beehive prospect off the north coast of Western Australia.

Under the farm-in agreement Santos and Total will fully fund the survey, earning the companies an option to acquire an 80 per cent stake in the WA-488-P permit, which is located in the Bonaparte basin.

If the option is exercised, the pair will fund all costs until completion of the first well in the WA-488-P permit.

In the event of a commercial discovery, Melbana will repay carried funding from its share of cash flow from the Beehive field.

Santos executive vice-president exploration and appraisal, Bill Ovenden, said the transaction put the company in a good position to boost its strategic acreage position in offshore northern Australia.

“The Beehive prospect is a large undrilled structure with great hydrocarbon-bearing potential and, being immediately adjacent to the Blacktip facilities and within reach of Ichthys infrastructure, a commercial discovery could be quickly delivered to market,” he said.

“This option adds to our diverse portfolio of core production, appraisal and exploration assets in northern Australia, including our foundation interest in Darwin LNG and the Barossa field, which is the leading candidate to backfill Darwin LNG as Bayu-Undan comes off plateau in the next few years.”

Melbana chief executive Peter Strickland said the agreement signified the potential of the Beehive prospect.

“This transaction provides a pathway for Melbana to be fully carried for a 20 per cent participating interest in the drilling of Beehive, with a firm commitment by Total and Santos to fund a 3D seismic survey, and then pre-agreed farm-in terms for the drilling of a well in WA-488-P if either Total or Santos elect to proceed after the seismic data is acquired,” he said

“Melbana welcomes Total and Santos as partners and we are excited by the opportunity to unlock the huge potential of the Beehive prospect for our shareholders.”