Clontarf Energy acquires 10% of Sasanof Prospect, offshore western Australia

Sasanof is a large, seismically defined, amplitude supported prospect in the Cretaceous Lower Barrow Group at a depth of 2500 m. It is an up-dip prospect from the liquids rich Mentorc Gas Field, previously discovered by Hess Corporation.

Operator Western Gas has secured the Valaris MS-1 semi-submersible drill rig with drilling scheduled for May/June 2022 at an estimated cost of circa US$20 million (of which Clontarf is funding US$4 million), which is fully funded. In the event that the costs for the Sasanof-1 Well overrun, Clontarf will be responsible for 20% of a further US$5 million. Thereafter costs will paid for on a pro-rata basis (i.e. Clontarf would need to contribute 10%). Any such further contributions from Clontarf would be made as a loan to be repaid from proceeds from any future production or the sale of the asset.

The 10% interest is being acquired from Western Gas, which will hold 52.5% in the WG519P following the Acquisition. The other partners in the licence include Global Oil and Gas Limited (25.0%) and Prominence Energy Ltd (12.5%).

The Acquisition consideration will be funded from the Group's existing cash balance, following the Company's placing to raise £3.5 million which was completed on 27 April 2022. Shareholder approval is not required for the issue of the 100 million Ordinary Shares but the Company will have to obtain the usual shareholder approvals to increase authorised share capital and dis-apply pre-emption rights in order to issue potentially the further up to 150 million Ordinary Shares on a successful well outcome. The Company will seek this in due course.

In the management accounts for the 6 months to 31 December 2021, WG519P reported nil revenue and a net loss of AUS$57,738. As of 31 December 2021, WG519P had gross assets of AUS$5.13m and net assets of AUS$1.62m.

David Horgan, Chairman commented, "There has rarely been a better opportunity to explore large potential gas prospects in a safe jurisdiction. International gas prices have soared since late 2021 - especially in Europe and Asia. This is partly due to geopolitical issues, though an underlying concern is the tightening supply/demand balance. Under-investment in new gas developments since 2014 - exacerbated by the C-19 pandemic - have left key markets under-supplied as gas demand recovers. Investment in intermittent renewables generation requires back-up from reliable generators, of which gas-fired turbines are the most flexible and efficient. LNG is now over half of global traded gas sales, and a third of European consumption - which will grow as buyers seek to diversify from dependence on Russian gas. An added attraction is Western Australia's clear legal title, political stability and pro-extractive industry policies. The multi-TCF Sasanof drilling offers a rare opportunity for ambitious gas explorers."

This supply constraint is particularly tight in Australia's North-West Shelf, where several expanding LNG export facilities urgently need new gas reserves. Meanwhile the Asian market (70% of global LNG deliveries) is also surging with economic recovery post C-19.

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Read the article online at: https://www.oilfieldtechnology.com/exploration/09052022/clontarf-energy-acquires-10-of-sasanof-prospect-offshore-western-australia/