Santos to Farm into Junior's Oz Permits
Santos has entered a farm-in agreement for shares in fellow ASX-listed player Armour Energy’s permits in the South Nicholson basin in northern Australia.
Armour said on December 4 that Santos had agreed to pay A$15mn ($10.2mn) for a 70% operated interest in the ATP1087 permit in Queensland. Payment will arrive within five business days of Armour filing an application with authorities for the deal’s approval. ATP1087 holds 22.1 trillion ft3 in best prospective gas resources, according to independent assessments.
Santos could transfer up to A$15mn more for 70% operated stakes in other permits in North Queensland and the Northern Territory that Armour has applied for but not yet received, namely ATP1107, ATP1192, ATP1193, EP172 and EP177, if the applications are successful.
Under the farm-in deal, Santos has pledged to carry Armour for up to A$64.9mn of exploration and development costs at the permits, including A$12.5mn at ATP1087. It will be able to drop out of any of the projects if drilling of a “significant” well is not completed successfully.
Armour CEO Richard Fenton described the agreement with Santos as “the start of another chapter” for the junior explorer.
“The frontier exploration and gas discoveries made by Armour in the South Nicholson Basin has demonstrated the company's ability to seek out and find valuable new resources, which draw the attention of major oil and gas companies,” he said in a statement. “Ongoing exploration in this region has the potential to increase employment opportunities and increase access to reliable energy for mines and remote communities in the Northern Australian region.”