Australia: Santos Drops Beehive Farm-In Option

Australian oil and gas company Santos will not be farming into Melbana Energy's Beehive prospect sitting in the shallow waters in the Bonaparte Basin off W. Australia.

Santos had an option to acquire an 80 percent interest in the offshore block in exchange for drilling costs of one exploration well. The deadline for the completion of the farm-in expired on Wednesday, March 4, 2020.

"Santos therefore no longer has any right to acquire an interest in the Permit. As a result, Melbana now has a 100% unencumbered 100% interest in the Permit," Melbana said Wednesday.

To remind, French oil major Total last year also had an option to farm into the block but decided to pass up on the opportunity. 

Melbana said Wednesday it was in talks with potential partners to join it in drilling an exploration well in the Beehive prospect - "a process that is greatly assisted by the high quality 3D seismic survey undertaken in 2018 by Total and Santos and the significant preparatory work that has been completed to date."

"Should Melbana be successful in attracting new partners to assist it with the drilling of an exploration well in the Beehive prospect, it intends to seek an extension to its obligation to drill an exploration well by December of this year to align with expected rig availability in 2021," Melbana said.

Santos has previously said that should it farm into the block, drilling wouldn't occur before the end of 2020. 

Melbana on Wednesday said it started work on reassessing its volumetric assessment of the prospective resource in the Beehive prospect and its interpretation of other possible plays in the Permit area using the newly acquired 3D seismic survey.

Beehive, sitting in a water depth of 40 meters, is located close to several existing facilities, including the Ichthys project and Blacktip field and pipeline offering several options for future monetization, Melbana has previously said.

Independent Expert McDaniel & Associates Consultants Competent Persons Report (30 June 2018) has estimated Beehive to have a prospective resource of 388 million barrels of oil equivalent (best estimate).

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