Triangle Energy gears up to explore expanded footprint in Perth Basin

Triangle Energy (Global) Ltd (ASX:TEG) is aggressively pursuing a three-pronged approach to exploration for 2021 and beyond across its producing Cliff Head Project, Mount Horner Project and new offshore licence WA-481-P all within the Perth Basin Part of the company’s growth strategy is to increase its position in the Perth Basin and it now holds 9,929 square kilometres of acreage offshore and onshore at the Cliff Head Project. Triangle managing director Rob Towner said: “We’ve now acquired the largest acreage for oil in the Perth Basin which is extremely underexplored and our strategy is to put some more holes in the ground as quickly as we can. “We’ve got some infill drilling in the planning stage at Cliff Head to increase our production with the existing facility and we’re looking to do a 3D seismic program at Mount Horner at the end of the last quarter of this year, and early next year we’ll be looking to do a similar program with the greater Perth basin offshore licence 481.” Cliff Head offtake options  The company’s December 2020 quarterly report stated that Cliff Head produced and sold 58,148 barrels (an average of 632 barrels of oil per day) which is an increase of 9% from last quarter, at an average oil price of US$42.4 per barrel. However, the company was notified last year that its crude oil supply agreement with BP would be terminated this month, as the Kwinana refinery will be converted into a fuel import terminal.  Triangle is now looking to negotiate offtake alternatives for Cliff Head production. Towner said: “It’s very disappointing, particularly when the Federal Government is talking about energy security and Cliff Head has been producing for nearly 15 years. “It also demonstrates the lack of investment that’s gone into the refining sector in terms of keeping up with modern technologies to treat oil and convert it to processed fuel. The Cliff Head Joint Venture (CHJV) crude sales revenue was A$3.37 million which is an increase of 14% on the previous quarter’s A$2.97 million due to increased production and an improved oil price. Lifting costs were US$26.92/barrel (previous quarter US$29.56/barrel) representing an improved cost per barrel due to additional production from CH7 well - which returned to production an average of 220 barrels of oil per day (totalling around 800 barrels of oil per day from the field) as of November 28, 2020. Exploration permit acquisition The company is focused on continued exploration and expansion within the Perth Basin, recently acquiring a higher stake in Mount Horner and EP-437 from Key Petroleum Limited (ASX:KEY) (OTCMKTS:KPHWF). Towner said: “We have entered an agreement with Key to acquire the other 50% of Mount Horner that we don’t own, and also 86.94%% of EP-437 which runs to the west of the coast and up to Geraldton.” In late January, the company received binding commitments to raise gross proceeds of A$1.19 million from sophisticated and professional investors who subscribed for 56,433,043 new ordinary shares at an issue price of A$0.021 per new share. The funds raised are intended to be applied towards the cash consideration payable to Key as part of the acquisition, including a cash payment of A$600,000, along with payment of any outstanding cash calls in respect of L7 plus a 5% gross overriding royalty on production from L7 and EP-437, the work program for Mt Horner and EP 437 and general working capital. 3D Seismic drilling plans Triangle has agreed to assume all of Key’s ongoing work program commitments within EP 437, which now requires the acquisition of 20 square kilometres of 3D Seismic and the drilling of one well prior to the end of year three of the permit term on May 27, 2022, with a second discretionary well due by the end of the permit term on May 22, 2023.  Terms of the original farm-out agreement for L7 are removed, allowing the company to acquire a much larger 3D survey across the area, which will also tie into the existing Irwin 3D survey to the south and extend into EP-437 to the west.  The primary aim of the larger 3D is to provide a near-complete coverage of the Bookara Shelf hydrocarbon fairway which targets undeveloped attic oil in infill well locations within Mount Horner field. Any discovery that could arise from the WA-481 permit could potentially be developed through the Cliff Head infrastructure. WA-481 acquisition  Towner said: “Prior to Christmas we also made an agreement with Pilot Energy (ASX:PGY) Ltd (ASX:PGY) to acquire 78.75% of the offshore exploration licence WA – 481-P. “The licence consists of around 8,000 square kilometres and is immediately adjacent to, and contiguous with, the Cliff Head Oil Field.” The transaction is conditional on Pilot acquiring Key's 40% interest in WA-481 and Pilot and Triangle agreeing to:  A revised joint operating agreement in respect of WA- 481-P;  A joint operating agreement in respect of the Cliff Head wind and solar project joint venture; and  Access agreements in respect of the Cliff Head and Arrowsmith infrastructure and operations on the area of WA-481-P.  The transfer of WA-481-P is subject to standard regulatory approvals.  As consideration for the acquisition, Triangle will pay Pilot $300,000 at completion and carry Pilot’s 21.25% share of costs for the first three years of the WA-481-P minimum work program up to a maximum of $1.22 million based on the current minimum work program.  Wind and solar JV In addition to and in parallel with the sale of the majority interest in WA-481-P, Triangle and Pilot have also agreed to form the Cliff Head wind and solar project joint venture with Pilot owning 80% and Triangle 20%. The JV will assess the feasibility of the development of an offshore wind and onshore wind and solar power project centred on the Cliff Head Offshore Oil Field production facilities, Cliff Head Alpha and the onshore Arrowsmith separation and processing facilities, encompassing:  Taking advantage of well-recognised, world-class wind and solar resources of Western Australia’s Mid-West Region;  Multi-tasking the existing Cliff Head Oil Field offshore and onshore facilities to improve their utilisation and extend their life;  Triangle and Pilot negotiating an access and coordination agreement to establish the basis for providing access to the existing Cliff Head alpha platform, the offshore/onshore pipeline right of way from the platform and to the onshore Arrowsmith separation and processing facilities; and  Pilot carrying Triangle’s costs in conducting the feasibility study for the development of the wind and solar power project.  Towner said: “We have agreed to enter into a renewables solar and wind farm joint venture with Pilot Energy, which will be designed for us to have a look at alternate options for the infrastructure that we have there. “With the pipelines coming from the platform from offshore to onshore, we’ve got the only beach access for any form of offshore energy-driven business.”  State Gas stakeholder Notably, the company is also the major shareholder of State Gas Limited (ASX:GAS) with an interest of 27.7% which is equivalent to A$31.2 million in value at $0.65 (as of March 17, 2021) per State Gas share.  Towner said: “We do have a third-string to our bow in that we have a substantial interest in the ASX-listed State Gas, which has a gas project in Queensland that’s worth approximately $30 million to us.”  State Gas holds petroleum lease (PL 231) and is focused on the shallow, conventional gas target in the Cattle Creek Formation, a marine sandstone source rock, with a major secondary target in the underlying Reids Dome beds.  Both targets have produced gas during the drilling of exploration and appraisal wells on PL 231 and several historical wells have flowed gas from the Cattle Creek Formation. State Gas continues to move towards commercialisation, investigating options to monetise the gas identified in the Cattle Creek Formation in the Central North gas pool centred around Primero-1, as well as any new gas located in the North-West Prospect.