With three Perth Basin deals announced in recent weeks, is this the start of consolidation in a basin of fragmented ownership?

At the recent Good Oil Conference, Jeff Schrull, Beach Energy’s (ASX:BPT) Group Executive for Exploration & Development, presented the Perth Basin as one of Beach’s five key hubs. Beach is preparing for Beharra Springs Deep drilling as its 50:50 Waitsia partner Mitsui E&P is advancing commercialisation of the gas field that renewed industry interest in the basin. As the oil and gas prices crashed shortly after the Waitsia discovery was announced in late 2014, Perth Basin exploration and development activity has been suppressed. Now with higher prices, we have seen three recent deals that may be the start of consolidation in a basin of fragmented ownership. The deals are:

Strike Energy (ASX:STX) launched a A$16.1M all-scrip takeover offer for UIL Energy (ASX:UIL). As a result of the deal, the merged group will have a significant holding in the Perth Basin, covering ~3,000 km2. Strike Energy completed a A$13M capital raise as part of the deal. John Poynton, Chairman of Strike Energy is quoted as saying the “Perth Basin continues to show signs of a heavily underexplored hydrocarbon system”. Strike plans to drill its West Erregulla prospect in early 2019, targeting a Waitsia-like deep Kingia-High Cliff conventional gas target. Some of UIL’s Perth Basin permits are believed to contain an extension of the Kingia-High Cliff sands.

Combined Strike-UIL Perth Basin Acreage Map
Combined Strike-UIL Perth Basin Acreage

Triangle Energy (ASX:TEG) is to acquire an additional 15% in the recent Xanadu oil discovery from Whitebark Energy (ASX:WBE) for a consideration of A$5M (A$3M upfront in cash and scrip and A$2M in success milestones) to bring its Xanadu interest up to 45%. It is expected that if developed, Xanadu oil will be processed at Triangle Energy’s nearby Arrowsmith processing plant. This follows after Tamarind Resources, Triangle Energy’s strategic partner increased its holding in Norwest Energy (ASX:NWE), operator of Xanadu, to 11.5% after buying shares on market.

Xanadu Oil Discovery Location Map
Xanadu Oil Discovery Location

Triangle Energy also completed a second deal in quick succession, this time farming into Key Petroleum’s (ASX:KEY) Mount Horner Oil Field. Triangle Energy will earn a 50% participating interest by funding up to US$3M (50% thereafter) of a programme including workover of two of the existing wells, 50 km2 3D seismic survey and drilling of new wells. Key Petroleum has been building up its Perth Basin acreage since it recently completed the acquisition of the Mount Horner Oil Field from AWE and a swap deal with Rey Resources to increase its stake in EP437.