Pilot Energy Limited (ASX:PGY) and Triangle Energy (Global) Limited (ASX:TEG) are pleased to announce that they have agreed to revise the existing Sales and Purchase agreement (announced 6th October 2022), to consolidate ownership arrangements for the Cliff Head Joint Venture (CHJV) and the proposed Cliff Head Carbon Capture and Storage Project (CH CCS Project). The revised agreement allows each company to separately pursue their energy sector strategies.
Pilot will now acquire the remaining 78.75% interest that it does not already hold in the Cliff Head JV via the purchase of Triangle subsidiaries including Triangle Energy (Operations) Pty Ltd (TEO), which is the operator of the Cliff Head Field. The transaction is expected to complete by early in 2024.
This agreement supersedes the arrangements under which Pilot was to increase its interest in the Cliff Head Oil Field JV to 60% and become full operator upon receiving National Offshore Petroleum Titles Administrator (NOPTA) approval of a Declaration of Formation for carbon capture and storage covering WA-31L previously announced.
Brad Lingo, Pilot’s Executive Chair said: ” The acquisition of the Cliff Head facility will enable Pilot to effectively pursue its innovative carbon capture project together with its integratedMid West Clean Energy Project. Pilot’s ambitions are being met methodically and this is yet another milestone achievement in the company’s growth strategy. Completion of the acquisition will enable Pilot to introduce strategically aligned partners into the Project as well as financial investors to fund the proposed development. This will be the first offshore CCS development in the Mid West, is an important clean energy development in WesternAustralia and will be one of the world’s leading CCS projects.
Existing employees of TEO will continue to work on the Cliff Head field as it transitions from oil production to the CCS project. Triangle will also support the ongoing operations of the Cliff Head oil field until the transaction completes.
The consideration to be paid by Pilot to Triangle is expected to total approximately $15 million over the CCS project life and will be staged as follows:
- $3.0 million cash when NOPTA issues Declaration Greenhouse Gas Storage Formation (that the Cliff Head reservoir is suitable for carbon injection);
- $4.5 million cash when NOPTA issues a Greenhouse Gas Injection License; and
- Up to $7.5 million in royalties from the Carbon Sequestration project (2% Revenue Royalty from third party carbon management services)
Completion of the revised agreement is subject to the following conditions precedent:
- NOPTA issuing the Declaration of a Greenhouse Gas Storage Formation (that the Cliff Head reservoir is suitable for carbon injection)
- Pilot to obtain sufficient financial security to satisfy NOPTA and Triangle that it can assume the full abandonment liability for the Cliff Head oilfield in accordance with the Offshore Petroleum and Greenhouse Gas Storage Act 2006.
Additionally, NOPTA approval of the transfers of the subsidiary entities to Pilot will be required following completion.
Conrad Todd, Triangle’s Managing Director said: “We are pleased to have revised the Sale and Purchase agreement with Pilot which leaves Triangle Energy Global to pursue its aim to become a mid-cap oil and gas company which offers growth through a combination of domestic and international conventional petroleum production and exploration projects.”
“In the interim period between signature and consummation of the agreement, Triangle will continue to support the operation of the Cliff Head oil field and Pilot’s efforts to secure the transition to carbon sequestration. As a result of this deal, Triangle’s improved balance sheet will allow it to focus on existing and new projects including the upcoming Perth Basin drilling programme”.