Baraka Energy & Resources: Statoil steps up as operator in Georgina Basin
Baraka Energy & Resources (ASX: BKP) has welcomed the appointment of Norwegian state oil company Statoil as the operator of the Southern Georgina Basin tenements in the Northern Territory that it is farming into.
Notably, Baraka believes that Statoil will see the benefits of amending the Joint Operating Agreement for EP 127 and EP 128 to allow it to pursue Hagen Member conventional targets either on its own or with an appropriate new partner.
Baraka has a 25% interest in both EP 127 and EP 128 as well as a 75% undivided working interest in the 75 square kilometre around the Elkedra-7 well on EP128.
Independent petroleum consultants Ryder Scott had previously reported that conventional carbonate zones updip from 11 vintage wells in EP 127 have the potential to host oil.
The company said that while Statoil’s primary objective is the shale oil and gas areas in the Southern Georgina Basin, this does not conflict with its initiative to pursue the conventional areas.
It also expressed its belief that the Norwegian company would assist other junior companies as a good corporate citizen in Australia going forward and that it would also find support from the Northern Territory Government as well as Native Title Holders due to the prospect of early royalty streams.
As part of its conventional push, Baraka has recently appointed an exploration manager Peter Philipchuk, who has over 45 years of oil and gas experience.
Philipchuk has worked for Texaco, Mobil Oil and formed several junior oil companies active in Alberta Foothills belt and was the vice president exploration and co-founder of Baraka joint venture partner PetroFrontier (CVE: PFC).
Statoil taking the reins
Statoil is taking over as operator of EP 103, EP 104, EP 127 and EP 128 as well as the exploration permit applications EPA 213 and EPA 252 under amendments to its farm-in agreement with PetroFrontier.
The Norwegian major will now spend the next US$160 million to fully fund exploration over three phases to the end of 2016, in return for 80% of PetroFrontier’s working interest.
This adds to the US$30 million that PetroFrontier and Statoil had jointly spent since the farm-in agreement was reached mid last year and the first half of 2013 and will give Statoil a 80% interest in EP 103 and EP 104, 60% in EP 127 and EP 128 (excluding the Elkedra-7 area) and 80% in exploration permit applications EPA 213 and EPA 252.
Under Phase 1 and 2A, Statoil will spend US$50 million throughout the remainder of 2013 and 2014 to fully fund to a 385 kilometres 2D seismic program as well as drill and stimulate between four to six vertical test wells.
It can then proceed to Phase 2B, where it can spend US$30 million on exploration before moving on to Phase 3, which will require it spend US$80 million.
"We believe the Southern Georgina Basin asset to be potentially very prospective and we are happy to assume operatorship for this 14 million acre area,” Statoil onshore exploration unit vice president Vidar Skjæveland said.
“This deal is in line with our exploration strategy where we pursue access early and at scale to de-risk the plays and grow organically through exploration activities. We will continue the good work done by PetroFrontier with the aim of clarifying the prospectivity.”
Baraka will remain responsible for funding its share of costs in EP 127 and EP 128.
Statoil’s assumption of operatorship and increased stake over its Southern Georgina Basin farm-in tenements highlights its belief in the prospectivity in the region.
This is good news for Baraka and and paves the way for exploration to really take off with a well funded operator.
The Norwegian major is a highly regarded international explorer and producer and has in the last year taken a growing interest in Australian oil and gas, having in March 2013 acquired a 30% stake in four exploration licenses held by BP in the Ceduna sub-basin within the Great Australian Bight, off South Australia.
This increased interest is likely to be mirrored by greater exploration spend and should the prospectivity of the Southern Georgina be proven, there is nothing stopping Statoil from expanding its activities in the area.
Proactive Investors continues to regard the farm-in as being very bullish for Baraka,
Besides underwriting a significant portion of any wells in EP 127 and EP 128, any exploration carried out in the other tenements will also serve to derisk Baraka Energy & Resources’ acreage position.
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