Talon Energy Ltd (ASX:TPD) has taken another step in its growth strategy by executing a formal farm-in agreement with fellow ASX-listed energy company Triangle Energy (Global) Ltd to farm into a 25% interest in two Perth Basin permits.
Since signing a term sheet with Triangle, Talon has successfully completed due diligence on the onshore Production Licence L7 and Exploration Permit EP437.
This work has focused on tenure status, environmental obligations and heritage agreements and Talon now has full access to the recently acquired high-quality Bookara 3D seismic data.
Final condition
The final outstanding condition precedent to the term sheet, the approval of new joint operating agreements for both permits, has been waived by Talon and Triangle until May.
This will allow new joint venture farm-in partner New Zealand Oil & Gas (NZOG) sufficient time to join Talon and Triangle in drafting the new documentation.
“Next step in evolution”
Talon’s managing director and CEO Colby Hauser said: “The completion of the farm-in agreement with Triangle for 25% interest in L7 and EP437 marks the next step in the evolution of Talon and fleshes out our plans for growth in 2024 after we commence gas production from Walyering and undertake our Gurvantes pilot well testing program in Mongolia during this year.
"We are very pleased to be partnering with Triangle and NZOG, companies that share a similar corporate and technical ethos with Talon, with the JV working closely together to leverage its combined expertise to continue to drive shareholder value through successful exploration.”
The farm-in agreement was signed at Triangle's offices by TEG's MD Conrad Todd MD and Talon's MD Colby Hauser.
Complementary skills
With the farm-in complete, Talon will receive the Bookara 3D seismic data, along with ancillary geological and geophysical data across the permits.
The farm-in partners intend to work through this dataset closely together, leveraging the complementary technical skills brought together through the JV.
L7 and EP437 have been identified by Talon and Triangle as high-potential permits for hosting large gas fields.
As well, the permits are in a strategic location covering 865 square kilometres in the northern Perth Basin.
Preliminary volumetrics undertaken by Triangle indicate a best-case Prospective Resource (2U) of 617 Bcf (gross, unrisked) for five features in the L7 permit alone.
Consideration
Talon will pay Triangle ~A$1.9 million towards past expenditure on the recently acquired Bookara 3D seismic data as consideration for its 25% interest in L7 and EP437.
A$1 million will be paid now and the balance of ~$900,000 paid prior to September 1, 2023.
In addition to these upfront costs, Talon will fund an uplift on the costs of three exploration wells to be drilled in 2024, with forecast expenditure of ~$7.3 million, net to Talon, paid as costs are incurred.
Costs associated with existing rehabilitation and restoration obligations for the permits are to be borne exclusively by Triangle.
Shared vision
TEG managing director Conrad Todd said, “We are delighted to welcome Talon, who are partners in the Walyering discovery in the Perth Basin and are about to become a gas producer.
"We look forward to working with Talon’s management and staff, who are acknowledged to be leading experts in the Perth Basin and who share our vision on the prospectivity of these permits.
"We are keen to now progress our exploration plans to drill these exciting blocks in the Perth Basin together.”
Work session for JV
When the NZOG farm out is fully completed, the JV will hold a technical work session, at which resource estimates for the prospects and leads will be discussed.
Following this session, the JV will agree on the resource ranges for the prospects and leads to be released to shareholders.
This will then be followed by the identification of well candidates leading to drilling which is estimated for early 2024.
Well planning for drilling in 2024 has started, with potential well locations being supplied to a company that will manage the well design and regulatory permissions.