Key Petroleum swaps Canning oil for Perth Basin
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Junior oil explorer Key Petroleum has sold off its Canning Basin oil assets in Western Australia by swapping its subsidiary for another.
Rey Resources (ASX:REY), the owner of Rey Oil and Gas Perth, bought Key’s Canning Basin subsidiary Gulliver Productions.
Key managing director Kane Marshall told Stockhead they’ve held the Canning assets since 2011. As one of the largest holders of oil and gas acreage among ASX-listed companies, it was time to “rationalise” the portfolio into something both manageable and understandable for retail investors.
There are some logistical issues with the Canning basin which made the Southern field more interesting as well.
There is little infrastructure up there and no refineries. The wet season also means production is out for four to five months of the year.
Mr Marshall says Buru, the only real player in the Canning, is able to use its infrastructure to export to Singapore but Key would need to get it down to Kwinana, near the Perth Basin.
In return, Key (ASX:KEY) bought Rey’s subsidiary Rey Oil and Gas Perth, which has a 43.5 per cent interest in the EP437 licence in the Perth Basin.
That licence contains the Wye Knot prospect and is next to Key’s recently acquired L7 Production Licence.
Key also owns 43.47 per cent of the EP437 licence and is the operator.
There is an uptick in activity among oil juniors at the moment, driven by higher oil prices (and higher stock prices) due to Donald Trump’s exit from the Iran nuclear agreement and other factors.
“We now have a strategic exploration portfolio within two prospective petroleum basins which are both located adjacent to infrastructure and markets,” Mr Marshall said.
“Key has a clear commercial path to near term oil production in the Perth Basin and conventional gas exploration in the Cooper Basin.
“The position of our Cooper Basin assets is particularly important with the imminent completion of the Northern Gas Pipeline that will connect the Carpentaria Gas Pipeline from Mount Isa to Tennant Creek.”
He says in the Perth Basin the acquisition and third party infrastructure available means they could be seeing cash flow from the project by late 2019.
The Canning Basin is where one of Australia’s few oil producers Buru Energy (ASX:BRU) has its assets.
The Perth Basin is where AWE has assets, along with others like Triangle Energy (ASX:TEG) and Norwest Energy (ASX:NOR) are testing the Xanadu field.
Key shares dropped 10 per cent to 0.9c on the news.