PERTH (miningweekly.com) – Australian oil and gas major Santos has signed a binding term sheet with ASX-listed Armour Energy over its South Nicholson Basin oil and gas exploration project, in Northern Australia.
Armour’s South Nicholson Basin exploration project covers some 408-million acres and includes both a granted tenement and applications in North Queensland and the Northern Territory.
Under the terms of the agreement, Santos will pay Armour A$15-million in cash within ten days of a formal farm-in agreement, and will pay a further A$15-million subject to the satisfaction of certain conditions regarding the application tenements.
Furthermore, Armour will be fully free-carried for up to A$65-million of exploration work at the tenement area.
In exchange, Armour will transfer a 70% working interest and operatorship of the tenements in a phased approach.
Armour executive chairperson Nick Mather said on Tuesday that Santos’ entry into the binding term sheet supported the company’s view that the South Nicholson basin represented one of Australia’s great opportunities for the discovery of a new frontier oil and gas province.
“In contrast to other locations, such as the organic rich Proterozoic basins in Oman and Siberia that host several multi billion barrel fields, the South Nicholson basin has not really been touched.”
The Armour farm-in comes just a day after Santos announced it would spend $1.39-billion to acquire the northern Australian business of major ConocoPhillips, which included that company’s share in the Darwin liquefied natural gas project, and the Bayu-Undan, Barossa and Poseidon assets.