CONFERENCE CALLER: Triangle Energy (ASX: TEG) director Darren Bromley outlined the company’s recent progress to the RIU Good Oil Conference in Perth.
After completing the sale of its Indonesian oil & gas asset to Indonesian company PT Enso Asia, Triangle Energy has taken its market cap from around $3 million to around $22 million.
Triangle Energy recently completed a Share Purchase Agreement with Roc Oil Company for the purchase of its 42.5 per cent Participating Interest in and Operatorship of the Cliff Head Oil Field and associated production facilities, located in the offshore Perth Basin, Western Australia.
“Triangle Energy now controls 78.75 per cent of the Cliff Head and we see a great opportunity to progress exploration of nearby appraisal targets and the larger offshore Perth Basin while maintaining strong cash flow from our current production,” Bromley said.
Bromley added that the Cliff Head acquisition combines well with the company’s 30 per cent farm-in interest in the TP/15 Joint Venture with Norwest Energy (ASX: NWE) to drill the neighbouring 160mmbl Xanadu-1 prospect as it provides Triangle immediate exposure to exploration upside along with additional strong exploration targets within the Cliff Head Oil Field.
Triangle’s 78.75 per cent interest in Cliff Head has come relatively cheaply, costing approximately $5.7 million.
Triangle estimates annual revenue from Cliff Head crude oil production at around $30.4 million, of which the company has rights to $23 million based on US$53 per barrel and $0.795 AUD/USD exchange rate.
Triangle acquired an initial 57.5 per cent interest in the Cliff Head Oil Field in June 2016 from AWE Limited (ASX: AWE).
Bromley indicated the Cliff Head facilities are the only offshore and operating onshore infrastructure in the Perth Basin, adding that they are therefore important for any development in the surrounding area.
“Cliff Head’s onshore Arrowsmith Stabilisation Plant is the only operating crude oil plant in the Perth Basin and is vital infrastructure in the development of exploration success by any explorer in the area,” he continued.
“The Cliff Head Oil Field currently produces approximately 1,204 barrels of oil per day (bopd) gross through the Arrowsmith facility, which has a processing capacity of up to 15,000 bopd, so is more than capable of processing third party crude.
“The acquisition of Cliff Head provides Triangle with a cash flow generating operation, strong production rates, exploration opportunities and the capacity to service third party crude in the highly-prospective and underexplored Perth Basin.”
Triangle’s JV partner Norwest Energy is making strong progress with the drilling of the TP/15 Xanadu-1 prospect, also located near Dongara in WA.
The Joint Venture contributions towards drilling costs and subsequent interests include:
Triangle Energy to contribute 40 per cent of the costs to earn a 30 per cent interest;
3C Group to contribute 40 per cent of the costs to earn a 30 per cent interest;
Whitebark Energy Ltd to contribute 20 per cent of the costs to earn a 15 per cent interest; and
Norwest Energy free-carried for a 25 per cent interest.
The JV considers Xanadu-1 to be a significant well for the northern Perth Basin.
Norwest has previously announced the Xanadu prospect having an unrisked recoverable resource of 160 million barrels.
The primary target for the Xanadu-1 well is the Permian Dongara Sandstone, with secondary targets in the Irwin River Coal Measures and the High Cliff Sandstone.
It is situated in very shallow water immediately adjacent to the coast, and is being drilled from onshore by way of a deviated well.
Xanadu is structurally similar to Triangle’s Cliff Head Oil Field and the potential oil will come from the same source, and will fit seamlessly into the Arrowsmith processing plant.
“We have made excellent progress to date at Xnadu-1, and we are ahead of budget and time,” Norwest Energy chief executive officer Shelley Robertson told the conference.
“We are expecting the primary and secondary targets to be intersected by the end of the week, so it is pretty exciting times.
“We have a challenging bit of drilling ahead of us, but everything has gone to plan so far, so there is no reason to suspect it will be any different going forward.
“At TP/15 we have a new work program commencing in May 2018 and the results at Xanadu will help to define the forward planning on that work program.
“Our JV partners are all fully committed to ongoing exploration on TP/15 as there is huge exploration potential on this new shore block and drilling Xanadu 1 is really just the beginning of this program with such a dynamic and committed Joint Venture.”