Triangle Energy (Global) Ltd has signed a key binding offtake agreement with BP Singapore Pte Ltd for crude oil produced at its Cliff Head Oil Field, 11 kilometres off the coast of Western Australia.
Under the terms of the offtake agreement, BP Singapore will purchase 100% of the crude produced from the Cliff Head Oil Field, comingled with crude and condensate of other producers on free on board (FOB) BP Kwinana’s terms.
The company entered into the agreement through Cliff Head Joint Venture (CHJV), where Triangle is the majority shareholder (78.75%) with Pilot Energy (ASX:PGY) Ltd.
Notably, Triangle Energy (Operations) Pty Ltd (TEO), will act as the operating agent on behalf of all of the designated seller groups concerning each of their offtake agreements and has agreed with each of the producers to govern the provision of these services.
The market has welcomed the news with shares up as much as 22.5% to an intra-day high of $0.022.
It comes at an opportune time for TEG with Brent this week trading at three-year highs.
“Contribution to West Australian community”
Triangle managing director Robert Towner said: “TEO, as operator of the CHJV, is delighted that the offtake agreement has been executed with BP Singapore.
“This provides certainty to the CHJV regarding upcoming oil production and continues the significant contribution to the West Australian community.
“The Cliff Head Oil Field, together with its significant infrastructure, is now capable of continuing to take oil to the market, as well as providing the base upon which further exploration and development success in the permit areas may be exploited."
Particulars of agreement
This offtake agreement will operate in tandem with TEG's already executed Product Storage and Services Agreement with BP Kwinana and is based on the terms of the non-binding offtake term sheet.
The designated seller groups have each entered into a storage agreement with BP Kwinana, operating together, pursuant to which the designated seller groups have leased tanks at Kwinana, Perth, Western Australia for storing its crude oil and condensate on a commingled basis.
The offtake is for the entire production quantity from the Cliff Head Oil Field, and pricing is at a fixed discount to Brent.
First lifting imminent
BP Singapore has been granted a right to match any offers for the sale of Cliff Head Product sold on a standalone basis for three years following the delivery period.
Based on current storage levels, the CHJV expects that the first lifting will take place this month.
The CHJV intends to provide shareholders with regular production updates to outline the production profile of the CHJV between liftings and to notify shareholders when liftings occur.