BP Signs Rig Contract for Oz Ironbark Project

BP Developments Australia has contracted the Ocean Apex semisubmersible drilling rig, operated by Diamond Drilling, for drilling the Ironbark prospect in exploration permit WA-359-P, offshore Western Australia, joint partner Cue Energy said February 13.

Cue Energy CEO Matthew Boyall said Cue estimates the Ironbark prospect contains a best estimate of 15 trillion ft³ of prospective recoverable gas resource.

WA-359-P is located in the Carnarvon basin, offshore Western Australia. The Ironbark-1 well, will be the first test of the Ironbark prospect, Cue said. Drilling is expected to begin in late 2020, following completion of the Ocean Apex’s other commitments. BP has now initiated environmental planning activities for a site survey of the well location and the drilling activities, it added.

The BP, Beach Energy, Cue Energy Resources and New Zealand Oil and Gas joint venture was formed in October last year. Cue, the previous operator, also announced in October that BP will act as operator on Cue's behalf regarding planning for the Ironbark-1 well.

BP, Beach and NZOG decided they will collectively fund US$11.3mn of Cue’s share of the Ironbark-1 exploration well costs. Cue will fund its remaining share of the well cost from its current cash reserves, which will be escrowed as required under the agreement.

“As required under the coordination agreement, Cue has contributed US$8.08mn from its existing cash into an escrow account to secure the proportion of its costs that are not carried by other parties. Cue will receive interest on the escrowed amount until drawn, which is expected to be closer to the well commencement date,” Cue said February 13. “With funding from the other parties on completion of the agreement, full funding for the Ironbark well is agreed.”

According to Cue, if all conditions are satisfied and regulatory approvals received, the co-ordination agreement provides for BP to become operator. The participating interests in permit will then be: BP, as operator, 42.5%; Cue 21.5%; Beach Energy 21% and New Zealand Oil & Gas 15%.

Ironbark is a prospect with an area of up to 400 km² and a best technical estimate of 15 trillion ft³ of prospective recoverable gas resource based on an internal assessment performed by Cue. Moreover, it is less than 50 km from the North Rankin platform - which ties into North West Shelf LNG plant - and is also near the Pluto and Wheatstone LNG infrastructure.