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Allens advises Cue on Ironbark joint venture coordination agreement, farm-out and option

31 October 2018

Allens has advised Cue Energy Resources Limited, through its 100 per cent subsidiary Cue Exploration Pty Ltd, on its joint venture coordination agreement, farm-out agreement and option agreement in respect of the Ironbark gas prospect.

Located in the Carnarvon Basin, offshore Western Australia, the Ironbark prospect is estimated to contain 15 trillion cubic feet of prospective recoverable gas.

Under the joint venture coordination agreement, Cue, BP, Beach Energy and a 100 per cent subsidiary of New Zealand Oil & Gas have agreed, subject to certain conditions being satisfied, to form a joint venture to drill the Ironbark-1 exploration well in WA-359-P, with BP as operator. This agreement will allow the parties to immediately begin work on detailed planning of the Ironbark-1 well. Cue would retain a 21.5 per cent participating interest in the WA-359-P permit, with US$11.3 million carry funding.

Under a separate farm-out agreement, subject to certain conditions and approvals, New Zealand Oil & Gas will acquire a 15 per cent participating interest in WA-359-P and will fund an additional 2.85 per cent of Cue’s costs of drilling the Ironbark-1 exploration well. New Zealand Oil & Gas will also reimburse Cue A$642,600 for past costs associated with WA-359-P.

Cue has also granted New Zealand Oil & Gas an option to take a 5.36 per cent participating interest in exploration permit WA-409-P, which adjoins WA-359-P. If New Zealand Oil & Gas exercises the option, Cue will be free carried for 5.36 per cent of the costs of drilling a well in WA-409-P or receive the cash equivalent. Cue will also be entitled to a 10 per cent royalty on all future revenue generated from New Zealand Oil & Gas’ equity interest in the permit. The option is currently valid until July 2019.

Commenting on the deal, lead Partner Mark McAleer said: 'If drilling is successful, the Ironbark prospect represents a truly transformative opportunity for Cue as a company. As a long-standing client of the firm, we are delighted to have assisted Cue with these transactions and we congratulate Cue on reaching this important milestone for the Ironbark prospect.'

Cue's Chief Executive Officer, Matthew Boyall, said: 'Allens has been a key adviser to Cue on every significant development on the Ironbark prospect. I really value the relationship with the Allens team and thank them for their ongoing assistance and support.

Allens legal team Mark McAleer (Partner), Anne Nguyen (Senior Associate)

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Notes for editors.

Allens is a commercial law firm working throughout Australia and Asia. Through its integrated alliance with Linklaters it provides clients access to 40 offices in 28 countries around the world.