Talon Energy’s latest Perth Basin project receives $9m in capex support from NZOG

Talon Energy (ASX:TPD) is the beneficiary of a farmout agreement executed between its Perth Basin partner Triangle Energy (ASX:TEG) and third party New Zealand Oil & Gas (ASX:NZO).

In December last year, Talon took up a 25% interest in two onshore permits held by Triangle as the latter kicked off a farmout operation. That move was facilitated under a binding term sheet. 

The farmout process has continued into early 2023, with funding for wells required to be drilled under the permits now locked in with a funding agreement from NZOG. 

“We look forward to working with NZO’s management and staff in conjunction with those of Talon Energy who share our vision on the prospectivity of these permits,” Triangle MD Conrad Todd said.

“We believe we have a well-aligned Joint Venture who are keen to now progress our exploration plans to drill these exciting blocks in the Perth Basin.”

Cost schedule breakdown

Under the agreement, Talon is tasked with drilling two wells at L7. Those two wells are now far less onerous for the company’s books, with the third party to join the farmout taking on a considerable brunt of the capital drain.

NZOG will pay: 

• $1.9m towards a 3D seismic campaign 

• $3.75m towards the first well in Permit L7 (50% of costs) 

• $2.81m towards second well in Permit L7 (37.4% of costs) 

• $1.5m towards the first well in EP437 (50% of costs) 

Talon is only required to pay 25% of costs for the well in EP347.

All wells will target Permian-era geology which underpins discoveries made in nearby blocks including Lockyer Deep. 

Talon shoring up Perth Basin play

This is not the first WA onshore domestic gas play Talon is involved in. 

Earlier this month, Talon won a production licence from the WA Government to commence the domestic production of gas from its Walyering gasfield, also in the Perth Basin, a project it manages alongside Strike Energy (ASX:STX).

That development will see Talon supply none other than Santos Limited (ASX:STO) with gas for five years under an existing offtake deal. 

The company also continues to keep its eye on its strategy for the Perth Basin-based Condor project, which boasts an unrisked Maiden Prospective Resource of 408 billion cubic feet of gas. 

Mongolia calling 

Then there’s the story of Talon Energy in Mongolia. 

Talon partners with TMK Energy (ASX:TMK) at the Gurvantes XXXV gas fracking project in the Gobi desert, a project in which Talon recently boosted its stake to 33%. 

The mammoth coal seam gas play is on the radar of regional energy heavyweight Chinese National Oil Company (NOC) PetroChina. 

A look at Talon Energy's six month charts

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Talon was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.