A potential investor in gas exploration and drilling off the coast of Newcastle has walked away, citing “unresolved issues at the joint venture level and complex approval procedures”.
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While opponents to the search for gas off the east coast have welcomed the decision, the company that owns the title for Petroleum Exploration Permit 11 – a stretch of ocean between Sydney and Port Stephens – says it has not affected plans for further seismic testing near Newcastle.
Perth-based company Sacgasco announced last week it would not act on an exclusive option it received last November to acquire RL Energy, the company engaged in a farm-in agreement with Asset Energy, which operates the PEP11 title.
A farm-in agreement is an arrangement between a company that holds a title and an organisation that will conduct exploration and drilling.
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Asset Energy performed 2D seismic testing off the coast of Newcastle last April. There are plans to progress to a 3D survey before any potential application for drilling is lodged with the Commonwealth authority.
Sacgasco said in a statement it would not acquire RL Energy because of “unresolved issues at the joint venture level and complex approval procedures” and would instead focus on its operations in the USA.
“PEP11 is a technically interesting project, but the uncertainty around approval risks and timing associated with regulatory and public processes make the project unattractive for Sacgasco shareholders,” managing director Gary Jeffery said.
In a memo to the Australian Securities Exchange, Asset Energy’s parent company MEC Resources said it was “disappointed” but committed to plans for 3D seismic testing off the east coast.
MEC Resources spokesperson Toby Foster told the Newcastle Herald Sacgasco’s decision had not affected the timeline for the PEP11 project.
“Whilst MEC Resources continues to invite prospective investors to consider investing into the company, the farm-in arrangement between RL Energy and Asset Energy is still live,” he said.
“It remains RL Energy’s commitment to fulfil its obligations pursuant to that farm-in agreement.”
NSW Greens marine and fisheries spokesperson Justin Field said Sacgasco’s decision showed that the plan to further explore PEP11 was “a dud”.
“Companies are walking away from the project as they realise the political and environmental challenges make it too great a financial risk,” he said.
"The decision by Sacgasco to walk away shows the community campaign is working to demonstrate the risks of developing an offshore gas industry in the region.”
