Mongolia and Perth Basin focused Talon Energy (ASX:TPD) on Monday confirmed its execution of a legally binding term sheet with Triangle Energy (ASX:TEG) to acquire 25% of the latter’s ‘L7’ and EP437 permits.
Talon states there is a low upfront capex and the deal stands with the benefit of recent 3D seismic data.
Both permits are onshore licences; EP437 covers a significant portion of land to the south east of Geraldton along WA’s coast; L7 sits contiguous at the bottom right of that package.
Talon says it has run its own analysis on both permits, finding both to be commercially significant for the company.
Talon, as part of its fund-in, must drill two wells at L7.
The first well is to be drilled in 2024 and Talon must pay 50% of what is estimated to be a $7.5m project at $3.5m.
If the price runs overboard, Talon will pay 25% of excess costs.
The second well at L7, also slated for 2024, will be another $7.5m exercise; but Talon must only pay 37.5% of those costs up to $2.8m. Excess will see Talon pay 25%.
All wells will target early-Permian aged geological formations which underpin discoveries made in nearby blocks including Lockyer Deep.
Further, a third obligation sits atop Talon’s head: it must pay 25% of well costs when a $3m asset is spud at the EP437 permit, also forecast to be drilled in 2024.
For those playing at home, that’s $7m from Talon: enough for the cost of one of the L7 wells.
Triangle accrued 100% of both the EP437 and L7 assets earlier this year.
“[Moving toward[ 25% interest in L7 and EP 437 with Triangle Energy represents over six months of work evaluating the northern Perth Basin,” Talon chief Colby Hauser said.
“Talon is very pleased to be partnering with Triangle and we look forward to continuing to drive shareholder value through successful exploration.”
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