Triangle Energy (Global) Ltd has modified the terms under which it will sell its share of the Cliff Head Joint Venture (CHJV) in Western Australia to Pilot Energy (ASX:PGY) Limited.
The two companies have altered the arrangements for the sale of Triangle’s 78.75% interest in the Cliff Head Project to Pilot, with Triangle to receive up to $16 million in staged payments and a royalty.
New terms of sale
Under the revised terms of sale, the total consideration to be paid to Triangle by Pilot is staged as follows:
- Triangle will sell and transfer its interests in the Arrowsmith land and facilities to Pilot for cash consideration of $4.5 million, to be paid in staged payments between mid-October and December 31, 2024.
- The company will then sell and transfer its remaining interests in the CHJV (held via its subsidiaries holding interests in the CHJV) for $4.0 million cash consideration; and
- Triangle will be entitled to up to $7.5 million in royalty payments from the carbon storage project.
Pilot will start paying the operating expenses for Cliff Head from mid-October 2024 and will reimburse Triangle for the Cliff Head operating expenses it incurs between August 1, 2024, and mid-October 2024.
The sale of the Arrowsmith land and facilities is expected to wrap up in mid-October 2024 and is conditional upon Pilot having sufficient funding in place by October 2024 to pay for it.
Drilling the Perth Basin
In the meantime, Triangle will focus on the upcoming drilling of the Booth-1 and Becos-1 wells in the Perth Basin, with the Ventia 106 rig mobilising to the Booth-1 well location.
The divestment of Cliff Head will remove any associated liabilities from Triangle’s balance sheet and leave the company well-placed to focus on this onshore drilling program.
As part of the preparation for the Cliff Head project’s conversion to a carbon storage operation, the CHJV will enter a non-production phase (NPP) in August – the company expects this will reduce operating costs until the facilities are converted.
During the NPP the Cliff Head wells will be suspended, the pipelines flushed and the storage tanks at the Arrowsmith Facility cleaned.
Existing employees of Triangle Energy Operations (the CHJV entity) will continue to work on the Cliff Head field as it transitions from oil production to the carbon storage project.
Triangle will also support the ongoing operations of the Cliff Head oil field until the transaction completes.
Triangle managing director Conrad Todd said: “We are very pleased to have finalised the Cliff Head sale agreement with Pilot.
A step forward for both companies
“To offset the delay in settlement, Triangle’s consideration has increased and will total up to $16 million, and Pilot will reimburse the operating costs from August 1 until settlement in October 2024.
“This modifies the agreement to meet updated legislation and is a significant step forward for both companies and, importantly, the culmination of a significant amount of work from the Triangle team over the past two years to streamline the company’s portfolio.
“The decision will enable Triangle to focus on its highly prospective conventional oil and gas activities, including the upcoming wells in the Perth Basin.
“With the Booth-1 well expected to spud later in July, Triangle is on the verge of the most active period in the company’s recent history, and we look forward to keeping our shareholders updated throughout this exciting period.”