Planet Gas Limited (PGS)

PELA 514 - Cooper Basin

PEL 514 covers 1,972 square kilometres and is located in the Cooper Basin of north eastern South Australia. After the completion of native title processes the PEL was formally executed with Primary Industries South Australia ('PIRSA'). The PEL has a five year term which commenced on 9 November 2011.

During 2012, the Cooper Basin has seen a substantial resurgence with recent developments in unconventional hydrocarbon exploration. In what was a Basin in its twilight, the considerable potential is coming to fruition which should see underutilised infrastructure continuing to deliver oil and gas to eastern Australia. 

PEL 514 contains an array of targets for conventional and unconventional hydrocarbon exploration.

Conventional oil and gas prospectivity lies within the Jurassic and Cretaceous Namur and Hutton sandstones, Murta Formation, and also the Triassic sands, Permian gas in the Toolachee and Patchawarra Formations and liquids-rich gas in the Tirrawarra Formation. The Birkhead channel sands which produce oil at the nearby Snatcher and Growler fields are considered targets.

Good quality coals, hydrocarbon rich shales and tight gas are also present across the area as evidenced by wells drilled within, and proximal to, the licence. There is an abundance of coal mapped across the licence providing coal seam gas potential in the coals of the Cretaceous Winton, Permian Toolachee and Patchawarra horizons. There is also shale gas potential in the Daralingie shale and the Murteree member of the REM shales.

The northern part of PEL 514 is underexplored and surrounds a trend of Jurassic and Triassic oil discoveries. The southern part of the block lies within the Permian Gas province. To the east there have also been several Permian oil and gas discoveries. Hydrocarbons in the northern area are sourced from the Patchawarra Trough and the Araburry Trough to the east and partially from the Poolowanna Trough to the west.

In December 2011, Planet Gas concluded a farm-in and Joint Operating Agreement with Senex Energy Limited ('Senex'). As part of the farm-out by Planet Gas, Senex has been appointed as operator and PEL 514 was notionally divided into north and south areas. Senex can earn a 50% interest in PEL 514 north and a 70% interest in PEL 514 south by fully funding exploration works with a notional value of $10.5 million.  Senex has completed its first year obligations and will fully fund two exploration wells during 2013.

During 2012, a total of 159 square kilometres of 3D seismic data covering the northern part of PEL 514 was completed, forming part of the 'Cordillo' 3D seismic survey.

In May 2013, a further Agreement was entered into with Senex. As part of the Agreement, Planet Gas will transfer a 10% interest in PEL 514 North and a 30% interest in PEL 514 South to Senex reducing Planet Gas's interest in the entirety of PEL 514 to 20% with Senex holding the remaining 80%.

The consideration for the transfer is:

• $5 million cash payment to Planet Gas; and
• Planet Gas will be free carried for a total of $9.0 million of its share of oil exploration expenditure within PEL 514;
• The above is in addition to Senex’s obligations to fully fund two wells in 2013 as part of the original farm-in agreement.

The Agreement also specifies conditional payments of:

• a royalty to Planet Gas which is calculated as 2.0% of the net Well Head Value of all oil produced from PEL 514 capped at $7.5 million; and
• upon certification of 8 million barrels of Proved and Probable (2P) oil reserves in PEL 514, Planet Gas will receive a payment of $5 million, and an addition payment of $5 million upon certification of an additional 4 million barrels of 2P oil.