Leigh Creek Energy (ASX: LCK) has inked a deal to farm into two “highly prospective” oil and gas permits in South West Queensland.
The energy junior today announced its wholly-owned subsidiary Leigh Creek Oil and Gas (LCOG) has executed a farm-in agreement with Bridgeport Energy for a 20% stake in permits ATP 2023 and ATP 2024 located in Cooper-Eromanga, Australia’s most prolific oil and gas basin.
According to Leigh Creek, the permits are expected to provide “both revenue and growth in the short to medium term” while the company continues to evaluate options for its South Australian syngas project, the Leigh Creek energy project (LCEP).
Leigh Creek managing director Phil Staveley described Bridgeport as a “competent operator” and said the joint venture partnership was “complementary” to the LCEP.
“This partnership … will diversify our portfolio, adding potential for multiple revenue streams,” he said.
While considering LCEP as a “large, medium to long-term project that will result in significant shareholder value”, the company had been reviewing its short and medium-term strategic oil and gas opportunities over the past year.
It evaluated projects on their potential to produce revenue in short periods of time, were manageable within current resourcing, have relatively low capital expenditure and could provide multiple revenue streams.
The company focused on assets in working petroleum systems, containing both oil and gas prospects and which had an operator with significant experience in the basin, confirming that Bridgeport’s permits met these requirements.
In Leigh Creek’s December quarterly report released last month, Mr Staveley said the board and management were focused on “realising the most productive options for the LCEP in order to maximise shareholder return.”
“This is an ongoing, complex and lengthy process that is being progressively de-risked,” he said.
The two Queensland permits lie 10km north of Australia’s largest onshore oilfield, the Jackson field. They are largely underexplored with just two exploration wells and varying vintages of 2D seismic, according to Leigh Creek.
Permit operator Bridgeport, a wholly-owned subsidiary of diversified energy company New Hope Corporation (ASX: NHC), has currently identified 15 leads with a primary focus on the Hutton sandstone oil play and the Toolachee formation gas play.
The joint venture partners have agreed to a four-year work program, in which Leigh Creek will fund 40% of the first two years of activity and 20% of activity in years three and four in order to earn its 20% interest in the blocks.
The granting of the permits remain subject to ministerial approval and the first year of the work program is expected to comprise Native Title negotiations and seismic reprocessing.
In the second year, two 300sq km 3D seismic surveys are planned to mature the identified leads to drillable prospects, ready to drill four exploration wells in year three.
The fourth year of the program will comprise further geological, geophysical and engineering work.
According to Leigh Creek, the proximity of the permits to existing infrastructure minimises any future tie-in and operational costs.