Carbon Minerals (ASX: CRM) has signed a farm-in operator status agreement with major player Santos (ASX: STO) in relation to ongoing seam gas operations in PELs 1 and 12 in the Gunnedah Basin of New South Wales.
The agreement includes changes to the exploration program to better assess the seam gas resource potential and progression to reserves bookings, and provides for the transfer of an additional 40% interest in PELs 1 and 12 to Santos for a cash consideration of $15 million.
This brings the participating interest of the parties in the project to the same level (Carbon Minerals 35%, Santos 65%) that would have been achieved at completion of the pilot farm-in work program of the original farm-in agreement.
Expenditure by Santos on the pilot farm-in program to date has amounted to $22 million of the minimum spend of $30 million indicated in the agreement.
A new work program has already been designed to optimise the definition of 2P gas reserves in the north-western part of PEL1 and adjoining areas in PEL12, an area that includes potential in both the Late Permian biogenic fairway (currently being assessed by the Kahlua Pilot) and the underlying Early Permian fairway.
Initial work will concentrate on progressing the Kahlua Pilot where pumping from the central well commenced at the beginning of September.