ConocoPhillips expands Australian portfolio by taking operatorship of offshore permit

ConocoPhillips Australia, a subsidiary of the U.S. energy giant ConocoPhillips, has executed a joint operating agreement (JOA) with Australia’s 3D Oil in relation to the offshore Victorian Permit VIC/P79, which satisfies a key condition of the farm-out agreement (FOA) the two players entered into earlier this year.

Back in July 2022, 3D Oil revealed a farm-out agreement with ConocoPhillips, which would allow the latter to become the operator of the VIC/P79 permit in the Otway Basin off western Victoria. Under the terms of this deal, 3D Oil will receive a $3 million (A$4.841 million) cash payment in exchange for ConocoPhillips acquiring an 80 per cent interest in the permit and operatorship.

Regarding the drilling of an exploration well by ConocoPhillips, 3D Oil will be carried for up to $35 million (A$56.51 million) in well costs, above which it will contribute 20 per cent of costs in line with its interest in this permit. Currently, 3D Oil is a 100 per cent titleholder and operator of the VIC/P79 exploration permit, which was awarded in February 2022 as part of the 2020 Offshore Petroleum Exploration Acreage Release.

In an update on Friday, 3D Oil disclosed that ConocoPhillips and TDO had executed a JOA for the permit, explaining that the completion of the farm-out would occur following government approval. The Australian firm describes the second deal with ConocoPhillips as “an outstanding result for the company,” adding that ConocoPhillips is “the ideal partner” to undertake the drilling on this permit in support of 3D Oil’s goal to become an East Coast gas producer.

Thanks to this deal, ConocoPhillips is expected to drill an exploration well within the primary term, currently ending in February 2025. According to 3D Oil, the timing of the exploration well under the permit VIC/P79 – covering 2,576 km2 – coincides with other potential upcoming activity in the Otway Basin “at a time when new gas supply to the East Coast market is critical.”

Regarding the prospective resource estimates for leads and prospects within the VIC/P79 exploration permit, the largest prospect in this permit is Vanguard, an east-west trending tilted fault block with the best estimate resource of 160 bcf of gas, which is located 5 km northwest of Beach Energy’s Geographe producing gas field in production license VIC/L23.

This permit contains two other leads – Defiance and Trident – situated northwest of Vanguard adjacent to Beach’s La Bella gas field in permit VIC/P73. The best estimate resources for Defiance and Trident are 32.5 bcf and 37.2 bcf, respectively. In addition, two other leads – La Bella Southwest and La Bella East – are also located in the vicinity.

Furthermore, this farm-in builds on the previously announced agreement with ConocoPhillips to enter T/49P, also as the 80 per cent interest holder. The permit covers 4,683 km2.

The VIC/P79 permit along with the T/49P permit makes the 3D Oil and ConocoPhillips joint venture “the dominant title holder” on the prospective shallow water Otway shelf, says the Australian firm.