Triangle Energy (Global) Ltd advises that its Cliff Head oilfield joint venture with Pilot Energy (ASX:PGY) has received Commonwealth approval of its declaration of greenhouse gas storage formation (DoSF), paving the way for $15 million in payments to Triangle.
The approval of the Cliff Head carbon capture and storage (CCS) project, on the WA 31-L licence area, from the Minister for Resources Madeleine King, triggers the sale of Triangle’s 78.75% interest in the Cliff Head project to Pilot Energy (ASX:PGY), which will deliver $15 million in staged cash and royalties to Triangle.
The transfer of Triangle’s interest frees up the company to focus on its highly prospective conventional oil and gas activities.
Triangle managing director Conrad Todd said: “We are very pleased to have received approval from the Federal Minister for Resources for the Cliff Head CCS project. This is a major milestone for both companies and, importantly, the culmination of a significant amount of work from the Triangle team over the past two years to streamline the company’s portfolio.
“The decision will enable Triangle to focus on its highly prospective conventional oil and gas activities, including the upcoming wells in the Perth Basin. With the Booth-1 well expected to spud in late July,
"Triangle is on the verge of the most active period in the company’s recent history, and we look forward to keeping our shareholders updated throughout this exciting period.
"Finally, we congratulate and thank the teams at Pilot Energy (ASX:PGY), NOPTA and NOPSEMA for their efforts in achieving this outcome.”
The transaction
The transaction still requires approval by the regulator, and Triangle will continue to operate the Cliff Head field until that time, with Triangle’s employees continuing to work on the Cliff Head field as it transitions from oil production to the CCS project.
The consideration to be paid by Pilot to Triangle is expected to total up to $15 million over the CCS project life and will be staged as follows:
- $3 million cash;
- $4.5 million cash when the National Offshore Petroleum Titles Administrator (NOPTA) issues a Greenhouse Gas Injection Licence (the next stage); and
- Up to $7.5 million in royalties from the Carbon Sequestration project.
Triangle notes that the sale also removes any “associated liabilities” from its balance sheet and leaves the company well placed to focus on its upcoming Booth-1 and Becos-1 wells in the Perth Basin.