Tap Oil Ltd. said Monday it will consider selling its 10% stake in the Zola gas discovery offshore Western Australia before any liquefied natural gas development occurs, and has already received several enquiries about its plans.
“Tap has recently received several enquiries from large overseas industry players about Tap’s plans for Zola,” the company said in a statement to the Australian Securities Exchange.
The Zola-1 exploration well in the WA-290-P permit area in the Carnavon Basin discovered a mean contingent resource of 378 billion cubic feet of natural gas. The block is operated by U.S. producer Apache Corp. .
The entire Zola structure–located south of the giant Gorgon gas field being developed by a Chevron Corp.-led consortium–contains a mean 2.33 trillion cubic feet of gas, according to a report by independent experts RPS Energy Services Pty Ltd.
“It is appropriate for a company of Tap’s size and funding capabilities to consider monetizing an asset like Zola prior to the incurrence of the large scale LNG development costs which are likely required to bring the asset into production in a timeframe of at least five years,” Tap said.
Tap, which has a market value of A$170 million, said it is “confident that it can maximize the value of Zola by monetizing the asset on attractive terms at the right time.”
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The decision comes just days after Chevron and its Wheatstone foundation partners, including Apache Corp, sanctioned development of a two-train 8.9 million tonne a year LNG operation near Onslow. The partners have regulatory approval for five trains.
The Zola-1 well, which is thought to have hit a field containing up to two trillion cubic feet of gas, is located within striking distance of the path of the Wheatstone trunk line, which will link the project’s fields with the Onslow LNG plant.
Apache (30.25 per cent) is the operator of WA-290-P.
Santos (24.75 per cent), OMV (20 per cent) and Nippon Oil Exploration (15 per cent) are the other equity holders and expected to be interested in Tap’s 10 per cent stake. It is unclear whether the WA-290-P partners hold pre-emptive rights over each other’s stakes.
Tap managing director Troy Hayden would not discuss his WA-290-P plans but pointed to the portfolio restructure that he started since joining the company in December.
“We are always trying to add value,” he said yesterday.
Zola’s attractiveness to other gas players will have increased now that Chevron has sanctioned Wheatstone because it provides a tangible development option for Zola’s gas. However, any go-ahead for Zola’s development, as part of Wheatstone’s expansion, is not expected for several years. The necessary delay is thought to have prompted Tap to try to realise its stake in the permit now.
By Peter Klinger, The West Australian
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