Amplitude Energy Ltd (ASX:AEL, OTC:COPJF, FRA:CDP0) has signed a binding agreement to acquire a 50% interest in the Artisan gas field from Beach Energy, in a deal designed to accelerate new gas supply into Australia’s east coast market.
The transaction covers the VIC/L35 production licence in the Offshore Otway Basin, where Artisan is an existing discovered gas resource about 17 kilometres southeast of Amplitude’s offshore pipeline infrastructure.
Amplitude will pay $58.3 million upfront, funded from existing sources, plus a $3.75/GJ royalty on future production, capped at 31 petajoules net to the company.
Adds discovered gas to ECSP
The acquisition strengthens Amplitude’s East Coast Supply Project (ECSP) by adding Artisan to the already discovered Annie resource, giving the project a broader base of known gas ahead of a targeted 2028 production start.
O.G. Energy will acquire a further 10% interest in Artisan on the same terms, giving it and Amplitude Energy aligned 50% stakes in the asset.
Amplitude’s share of the deal comprises a $58.3 million upfront cash payment on completion and a $3.75/GJ royalty on future production from its share of Artisan, capped at 31 PJ net to the company.
Amplitude said combining Artisan and Annie improved ECSP economics, while exploration success at Juliet and/or Nestor could provide further upside.
Infrastructure advantage
A key attraction of the deal is Artisan’s proximity to Amplitude’s existing Otway Basin infrastructure, including the Athena Gas Plant.
The company said Artisan gas is expected to be compatible with Athena processing, while the short tie-in distance, existing pipeline tee pieces and available ECSP flowlines could support a lower-cost development route.
Managing director and CEO Jane Norman said, “Producing Artisan through Amplitude Energy’s existing infrastructure allows faster and lower-cost development of this gas for the east coast domestic market. Artisan development costs will significantly benefit from leveraging the existing ECSP program and our readily-available infrastructure. This is a win-win for Amplitude, O.G. Energy and Beach with respect to optimising our respective Otway Basin positions.”
“We expect to rapidly move to FID on the development phase of the ECSP over the next few months while the drilling of the Juliet and Annie wells is conducted, with Juliet now brought forward and drilling expected to commence by late July or early August. Annie and Artisan together provide the base resource for the ECSP, with project economics potentially further improved by Juliet and/or Nestor discoveries. This transaction provides significant value and optionality for the ECSP and provides customers with certainty in an uncertain market.”
Growth pathway
Amplitude said the ECSP, with Artisan included, could support a more than 60% increase in equity production, subject to final investment decision, field outcomes and other development variables.
The company also expects the acquisition to be net asset value accretive and earnings accretive from the start of Artisan production.
What’s next
Completion remains subject to the Artisan development well being completed, regulatory approvals and other customary conditions.
Beach Energy will fund and operate the Artisan development well before completion, while Amplitude expects to receive the Transocean Equinox rig in July-August for the Juliet-1 exploration well, followed by the Annie-2 development well.