BARRY FITZGERALD | The Australian | December 10, 2013 12:00AM
TWO ASX-listed oil companies have gone in to a trading halt ahead of releasing details of what is tipped to be a big-spending joint venture deal between them in South Australia's Cooper Basin that involves US backing.
Adelaide-based Ambassador Oil & Gas went in to its trading halt saying it was finalising details of a farm-in agreement for its PEL 570 permit in the Cooper Basin's Patchawarra trough, while West Australian unconventional oil and gas specialist New Standard Energy said its trading halt was related to a "substantial corporate transaction".
The market is expecting a deal in which New Standard will agree to earn a 52 per cent interest in Ambassador's PEL 570 by committing to spend as much as $48 million on exploration, while New Standard was tipped to also possibly be striking an alliance with US unconventional oil-gas specialist Magnum Hunter Resources.
Interest in both the conventional (free-flowing oil and gas from sandstone reservoirs) and unconventional potential of the Cooper Basin has been heating up in recent times, with local players such as Santos, Beach and Senex teaming up with foreign companies to spend as much as $3.5 billion on exploration in the next five to seven years, according to South Australian government estimates.
Ambassador's currently wholly owned PEL 570 covers a big section of the Patchawarra trough, which lies to the north of the Nappamerri trough where much of the action has been taking place.
Ambassador has previously released estimates covering the potential for as much as 20 trillion cubic feet of gas to be in place in PEL 570, broken down into 13tcf of gas in coal seams, more than 8tcf in "tight" rocks and 1.5tcf of gas in shale formations. The recovery factor for any of it would be much less.
The hope is that the gas in the Patchawarra will come along with more revenue-boosting oil and other liquids than is the case in the Nappamerri.
Ambassador had previously announced that it had a deal under which it could farm out a 70 per cent interest in PEL 570 to the privately held Outback Energy Hunter in return for a $50m exploration commitment.
Outback is backed by Michael Fowler, former chairman and founding director of Nexus Energy, and is associated Magnum Hunter.
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