Rawson Oil and Gas (Rawson) has executed a non-binding Memorandum of Understanding (MOU) with Weston Energy to sell gas from the Nangwarry‐1 exploration well in the Otway Basin, South Australia in the event of a commercial discovery.
The MOU is a step towards signing a binding Gas Sales Agreement (GSA) between the two companies and covers the purchasing by Weston Energy of up to 4 petajoules (PJ) of gas per year for a period of five years. The advancement toward signing a GSA would be subject to a number of conditions, however, including the success at Nangwarry‐1 and Weston Energy finalising gas transportation arrangements.
By providing access to customers and pipeline infrastructure, this MOU could form a key step towards fast commercialisation in the event of ‘commercial success’ with the Nangwarry‐1 exploration well. According to the MOU, Weston Energy will be making a prepayment of up to A$6 million, which will give Rawson additional financial flexibility to execute future field development activities. The agreement will allow Rawson to quickly convert any discovered resource into reserves and production.
The Nangwarry‐1 exploration well is located 9km south of the new Beach Energy Discovery at Haselgrove‐3 ST1 and is a conventional gas and liquids prospect and is considered analogous to the nearby Katnook, Haselgrove and Ladbroke Grove fields, of which have produced approximately 70 Bcf of raw gas since their discovery. An independent petroleum engineering firm has assessed the best estimate prospective resources of the Nangwarry‐1 at 57 Billion cubic feet of gas.
The MOU will allow Rawson and Weston Energy to sell more gas into the South Australian market and keep with the terms of the South Australian Government PACE Grant recently awarded to Rawson and the company’s PEL 155 Joint Venture Partner Vintage Energy.
“In the event of success at Nangwarry‐1 we will have a foundation customer to work with as we sell gas into the South Australian market. Drilling of the Nangwarry‐1 well is planned for FY19 and if we find gas we will be working to have the discovery in production as early as possible,” commented Allister Richardson, Chairman of Rawson Oil and Gas.
“With gas prices in the Mt Gambier area as high as $15 GJ I am confident that Rawson and Weston can deliver better options for local gas buyers and help build economic prosperity in South Australia,” the Chairman explained.
Garbis Simonian, Managing Director of Weston Energy said their aim is to support Australian domestic businesses and jobs.”
“This MOU with Rawson is a significant step in delivering competitively priced contract gas to our industrial and commercial gas customers in South Australia.”
More information on the MOU can be found here.