Key Petroleum signs deal to explore Marengo field area

Key Petroleum has reached an agreement with Six Pines Capital to explore the greater Marengo gas field area within ATP 924 in Queensland, Australia.

Under the terms of the deal, Six Pines can raise a minimum of A$5m ($3.76m) to fund the expenditure related to drilling, completion and the testing of at least two wells into the Permian within an area surrounding the Marengo field, which is defined as Area 3.

Once Key Petroleum receives the amount, it will transfer operatorship of Area 3 to Six Pines, or its financially guaranteed contributing entity.

Key Petroleum will sign a formal farm-out agreement with the entity, which will pay for the drilling to completion costs of the wells in exchange for a 75% interest in Area 3.

The remaining 25% interest will remain as free-carried.

Key Petroleum managing director Kane Marshall said: “With the private equity interest in other producing Cooper Basin operators such as Senex and Santos, it is not surprising that North American private equity is now starting to look at lower risk gas exploration adjacent to infrastructure to supply the East Coast gas market.

“We look forward to working with Six Pines on maturing drilling in two of these five Marengo area prospects and there is plenty of both oil and gas exploration upside in the event of success and subsequent development.

“The agreement now allows Key to focus its attention on its core areas, particularly the four big conventional targets within the Permian and Triassic along the Gilpepee trend where gas has already been recovered up dip on the Gilpeppe anticline.”

The company noted that though the area is largely unexplored, it is considered highly prospective for both oil and gas.

Area 3 is located close to the Carpentaria gas pipeline that links Santos-operated Ballera gas field to Mt Isa in the north.