AUSTRALIAN oil and gas giant Santos will accelerate its efforts to explore and develop six permits in the Northern Territory and Queensland, amending a farm-in agreement with its smaller joint venture partner Armour Energy, now helmed by Brad Lingo.
On Monday, Armour Energy told its shareholders that Santos, which is farming into the permits for a 70% stake, would pay the company a one-off cash payment of A$6 million, and carry the junior for nearly $65 million of exploration costs.
The farm-in was originally signed in December last year, but the update to the contract today aims to speed up exploration and development.
All six of the permits are located in the South Nicholson Basin, four of which are located in northern Queensland, and two in the eastern region of the Northern Territory.
Combined, the permits hold a gross 10.7 million acres. Armour's independent experts have assessed 22.1 trillion cubic feet of best prospect gas resources in the middle of the Proterozoic aged Lawn Hill and Riversleigh Shale formations within one permit alone.
Only one permit, ATP1087, has been granted. The other five permits are still considered application areas and are yet to be awarded to the joint venture.
Originally Santos made a $15 million payment to Armour for its 70% interest in the ATP1087 permit and was to pay a further $15 million for a 70% stake in all five other permits, once they were approved.
Instead Santos has the $6 million one-off payment on top of the $15 million.
While Armour will be the titleholder of the permits, Santos will take operatorship and responsibility for work programs and native title negotiations.
Armour is expected to pay around $750,000 per annum in exploration and development costs per year, once the venture begins work.
Armour chief executive Brad Lingo said he was pleased with the progress of the farm-in agreement which "significantly de-risk and advanced" the progress of work programs.
Source: Energy News Bulletin