Hartshead Resources NL said on Thursday it had completed the transfer of a 60 percent interest in a project in the UK’s Southern Gas Basin for a gross consideration of $132.23 million (about 196.3 million AUD) to help the Australian company meet early stage development costs.
The divestment of the License P2607 project to RockRose Energy, a hydrocarbons developer in the UK North Sea, means that Hartshead now “has the necessary equity financing to meet the company’s share of the project’s development costs not owed by in Phase 1,” CEO Chris Lewis. said in a press release.
“Completion of the Farm-out is a significant milestone for Hartshead as it materially de-risks the project and provides a clear path to full funding and further development,” the company said in the announcement. “The transaction represents a significant increase in project value and secures more than $536 million of gross project spend, providing both technical and commercial validation of the Company’s gas development.”
The payment, $8.08 million (more than AUD 12 million) of which has been made in cash, includes $48.4 million of investment and capital allowance from the UK government, Hartshead said .
The Perth-based company said it will make a final investment decision (FID) for the first phase in the third quarter.
The initial phase aims to redevelop the Anning and Sommerville fields with six production wells. Hartshead expects production from these wells to begin in 2025 at a gross volume of up to 140 million cubic feet per day.
“The company has recently advanced discussions with various groups regarding debt financing of its remaining share of development costs and is very confident of successfully concluding these discussions,” he said. “At this stage, the remaining development funding will likely consist of a bond issue, the pre-sale of net Hartshead gas sales or a combination of both.”
Hartshead said on May 2 it announced the conclusion of the geological survey of the two fields that it had completed a $20 million share issue to keep it “well-funded to move forward with key project works” .
Conducting the survey allows the company to move forward with the required field development plan (FDP).
“The Hartshead team is progressing project workflows with the completion of FEED [front-end engineering and design] and imminent FDP and our expected third quarter FID [third quarter] this year,” Lewis said in Thursday’s announcement.
Hartshead opened at AUD 0.031 on the Australian Stock Exchange on Thursday.
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