Amplitude Energy has signed a binding agreement to purchase a 50% interest in VIC/L35, containing the Artisan gas field in the Offshore Otway Basin, Australia, from Beach Energy.
Artisan is an existing discovered resource in the Offshore Otway Basin, accelerating target gas production to 2028 together with the East Coast Supply Project (ECSP).
O.G. Energy has agreed to purchase a 10% interest in Artisan on the same commercial terms, such that Amplitude Energy and O.G. Energy each have aligned 50% interests in the asset.
Amplitude Energy’s net share of acquisition consideration consists of an upfront cash payment of $58.3 million on completion of the agreement, plus a royalty of A$3.75/GJ (nominal) over its share of future Artisan production (capped at 62 PJ gross, or 31 PJ net to AEL).
Managing Director and CEO Jane Norman said the transaction accelerates the production of Artisan’s resource and further improves ECSP economics.
“Producing Artisan through Amplitude Energy’s existing infrastructure allows faster and lower-cost development of this gas for the east coast domestic market. Artisan development costs will significantly benefit from leveraging the existing ECSP program and our readily-available infrastructure. This is a win-win for Amplitude, O.G. Energy and Beach with respect to optimising our respective Otway Basin positions.
“We expect to rapidly move to FID on the development phase of the ECSP over the next few months while the drilling of the Juliet and Annie wells is conducted, with Juliet now brought forward and drilling expected to commence by late July or early August. Annie and Artisan together provide the base resource for the ECSP, with project economics potentially further improved by Juliet and/or Nestor discoveries. This transaction provides significant value and optionality for the ECSP and provides customers with certainty in an uncertain market.”
Development concepts being progressed involve tie-in of Artisan to Amplitude Energy’s existing Offshore Otway Basin infrastructure in 2028, in conjunction with the development phase of the ECSP. Initial technical work indicates the composition of Artisan’s gas is compatible for processing through Amplitude Energy’s Athena Gas Plant, alongside the discovered Annie resource and any other discoveries made in ECSP exploration targets. Primary offshore approvals and licences for Artisan are in place, and project-level approvals for the development of the field through Amplitude Energy’s infrastructure will be integrated with other ECSP approvals, subject to final investment decision.
Development of Artisan through Amplitude Energy’s infrastructure has significant cost advantages due to the proximal nature of its tie-in to the Casino-Henry-Netherby pipeline. The short tie-in distance, preexisting pipeline tee pieces, and ability to use flowlines ordered with ECSP for the tie-in, provides the ability to integrate Artisan into existing ECSP development activities.
Adding Artisan to the ECSP bolsters the gas available to southern market customers. Its proximity to demand centres in Victoria and South Australia provides greater certainty of deliverability, ability to support longer-term offtake confidence, and lower delivered cost through avoidance of long-haul transportation exposure.
As part of the transaction the parties have agreed to amend the Transocean Equinox drilling schedule such that the Artisan development well is brought forward. Activities on the Artisan well commenced earlier this month. Beach Energy will fund the Artisan development well and completion activity, and remain operator while this is undertaken, with the SPA conditional on the completion of the well with a subsea tree.
It is expected that the amendment of the drilling schedule will result in Amplitude Energy receiving the Transocean Equinox rig during July-August to conduct the Juliet-1 exploration well, followed by the Annie-2 development well. A decision on whether to drill the Nestor prospect will be made by Amplitude Energy and O.G. Energy at a later date.