Falcon Oil & Gas Ltd., an explorer planning to drill shale prospects in Australia with Hess Corp., said it is in negotiations to form a second partnership to develop about 10 percent of its acreage in the country.
Falcon is seeking a shale specialist to fund exploration in two areas spanning about 700,000 acres of the Beetaloo Basin, Chief Executive Officer Robert Macaulay said today in a telephone interview from the company’s headquarters in Denver. The company owns permits covering 7 million acres in the basin in the Northern Territory, according to its website.
The oil and gas explorer, which holds almost 15 million acres in three projects in Australia, Hungary and South Africa, agreed to a venture with New York-based Hess last year to develop three blocks in Beetaloo. Hess, ConocoPhillips, BG Group Plc and Mitsubishi Corp. have agreed to fund shale gas exploration campaigns through ventures in Australia.
Before the Hess transaction, “we had every major in the world active in shale, all the serious players, come by to look at our data,” Macaulay said. “The opportunities in Australia are tremendous. It’s going to become more attractive.”
Hess plans to make a decision by the year-end on whether to fund a five-well drilling program that’s expected to start in 2013, he said. Any partnership accord to develop Falcon’s additional holdings in the Beetaloo region, about 600 kilometers (373 miles) south of Darwin, would probably be reached after Hess commits to the drilling plans, he said.
The five wells may cost about $50 million, Macaulay estimated, saying those expenses have yet to be determined. Hess has paid the company $20 million and agreed to fund $40 million of initial work that started last year, Falcon said in July.
Falcon advanced 5.3 percent to 10 Canadian cents in Toronto trading yesterday. The shares have slumped 39 percent in the past 12 months.
Santos Ltd., Beach Energy Ltd., Senex Energy Ltd. and AWE Ltd. are among explorers with shale-gas projects in Australia. Santos is planning to drill four unconventional wells in the second half in the Cooper Basin, the country’s main source of onshore gas.
With almost 400 trillion cubic feet of estimated shale gas that may be recoverable, Australia has “major” potential in four regions, the U.S. Energy Information Administration said in April. The areas consist of the Cooper Basin straddling the South Australia and Queensland border, the Maryborough Basin in Queensland, and the Perth and Canning basins in Western Australia, according to the EIA.