With a path established to divest its interests in the Cliff Head Joint Venture (CHJV) and proposed Cliff Head Carbon Capture and Storage (CH CCS) Project, Triangle Energy (Global) Ltd is focusing on commercializing high-value interests in the North Perth Basin.
The onshore footprint of the experienced oil producer and explorer in the basin includes Production Licence L7 and adjacent Exploration Permit EP437 at which 25% interests have been farmed out to Talon Energy Ltd (ASX:TPD) and New Zealand Oil and Gas Limited (NZOG), leaving Triangle with 50%.
At L7 at least five prospects and leads have been confirmed and the partners see strong potential for in-demand gas in the Kingia and High Cliff reservoirs.
There is also considerable potential for oil and gas in EP437 with two oil prospects identified to date of which the Becos prospect has a best estimate of 5 MMbbl oil recoverable with a potential value of $20/bbl.
Exploration wells
Plans to advance the properties in 2024 include drilling two exploration wells at L7 in the first half of the year and one at EP437, with this work to be paid for by the two partners as part of farm-in agreements.
At L7 there are 3-4 high-graded gas prospects and two drill slots have been allocated.
The Booth, Huntswell Deep and Mountain Bridge South prospects neighbour the Dampier-Bunbury Natural Gas Pipeline - a crucial energy source for several mining and resources hubs.
Boosting confidence in the economic potential of L7 is that the Mt Horner-2 updip overlies a large basement structure while the Booth Prospect has a best estimate of 279 Bcf of gas. With a gas spot price of $9 per GJ, the potential value is $2 million per Bcf.
Farm-out details
The farm-out arrangements for L7 and EP437 will see Talon and NZOG each contribute 50% of seismic costs as well as 50% of the first deep well in L7 and 37.5% of the second deep well in L7.
Talon will pay 25% of the shallow well in EP 437 and NZOG will pay 50% of this well.
The total Talon payment for a 25% interest in Triangle’s Perth Basin properties is around $9.2 million and NZOG’s total payment for 25% is about $9.96 million.
This will see Triangle have exposure to the three exploration wells valued at approximately $3 million while retaining a 50% interest in both permits.
Perth Basin interest grows
Triangle Energy’s focus on the Perth Basin comes as interest is on the rise and the value increases. Existing operators have been benefiting with Minerals Resources interests valued at approximately $450 million, Hancock about $440 million and Strike Energy at around $140 million.
All three have market caps well in excess of the $30 million of Triangle, which has one of the last underexplored acreage positions in the North Perth Basin.
The Perth Basin has a role to play in Western Australia’s energy future and it is evident that gas will be required for a long time and will play a crucial role in the state’s transition to net zero. Gas is set to be the swing producer in WA.
Cliff Head divestment
Also, during 2024 Triangle Energy hopes to complete the divestment of its majority interest in the Cliff Head JV as it pivots from legacy assets to high-value Perth Basin exploration.
The divestment will coincide with CHJV partner Pilot Energy (ASX:PGY) converting the almost depleted Cliff Head oil field and facilities to a carbon capture and storage facility.
Triangle will receive ~$15 million in staged payments with $3 million on first regulatory approval (Declaration of an Injection Formation), $4.5 million on second regulatory approval (Approval of Project) and $7.5 million (capped) as a CCS royalty.
The divestment is subject to a number of conditions:
- NOPTA approval of the suitability of the Cliff Head reservoir for CO2 injection; and
- Pilot finance sufficient to cover the Cliff Head abandonment liability and commence CCS project, which appears likely to be in place now.
This will remove Triangle’s abandonment liability for Cliff Head, leaving clear air to pursue growth opportunities in the conventional oil and gas space whilst maintaining capital discipline.
Overseas opportunities
Triangle is also pursuing opportunities outside Australia, including in the UK and Asia.
In the UK, Triangle and its 50-50 joint venture partner Athena Exploration Ltd have been offered five blocks in the West of Shetlands gas province which contains the Cragganmore gas field.
The acreage is part of the first tranche of awards by the North Sea Transition Authority (NSTA) in the 33rd UK Licensing Round and is adjacent to the Tobermory and Bunnehaven gas fields offered to British energy giant Shell (LON:RDSa).
Athena, the operator of the gas field, has estimated a best-case resource of 527 billion cubic feet (Bcf) of recoverable gas for Cragganmore, from a low estimate of 273 Bcf to a high estimate of 1,022 Bcf.
Further applications are being evaluated by the UK regulator.
In Asia, where company management team members have worked and lived for decades, Triangle has applied for an onshore permit in the Philippines, adjacent to San Antonio gas field and Mangosteen gas discovery.