U.S. shale gas explorer Aubrey McClendon, who helped pioneer the U.S. shale boom, is negotiating two acquisitions for Australian drilling rights marking his first move overseas, with the combined value of the deals at over $160million. The departure from Australian shale of majors such as Chevron earlier this year and ConocoPhillips and PetroChina in late 2014 has left an opening for the likes of McClendon.
On Thursday Australia-based Armour said in a statement that McClendon’s American Energy Partners LP signed a letter of intent and a three-month exclusivity agreement with Armour Energy Ltd. to acquire a 75% stake in 21.5 million acres of drilling rights. Terms of the preliminary deal require American Energy to pay Armour as much as $18 million in signing bonuses and to spend $100 million on oil and natural gas drilling over five years, with work on the project expected to start by next May.
In a statement Armour’s executive chairman, Nicholas Mather, said that the deal “vindicates Armour’s view that the McArthur Basin represents one of the worlds great opportunities for the discovery of a new frontier oil and gas province”. Armour is also seeking buyers for a stake in 7.8 million acres that it holds in the same region.
On Friday, in a separate deal, American Energy signed a letter of intent to buy rights across 14.6 million acres from Empire Energy Group Ltd. As part of the deal American Energy will pay as much as $15million in signing bonuses and other payments, as well as $60million in drilling costs, with an option to acquire a 7.5% stake in Empire.
Australia is home to the world’s sixth-largest shale oil reserves and seventh-biggest tranche of shale gas, according to the US Energy Information Administration (EIA).
Meanwhile in related news, a pipeline in the Northern Teritory that would supply east coast markets with shale gas is hoped to be up and running by 2018, according to NT Chief Minister Adam Giles. Amid fears that there may be an impending gas shortage in New South Wales, the Northern Territory Government is looking to develop more onshore deposits, although some in the business community question whether extracting the gas would be economically feasible.
APA Group, DUET Group, Jemena and Merlin Energy have been shortlisted to progress to the final stage of the bidding process to develop the pipeline, with the final bids to build the line due in September.
Mr Giles said he was confident the successful bidder for the project would be announced shortly, and gas “would be flowing” by the end of 2018.
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