Triangle Energy (Global) Ltd is selling the remainder of the Cliff Head Joint Venture (CHJV) encompassing the proposed Cliff Head Carbon Capture and Storage Project (CH CCS Project) to Pilot Energy (ASX:PGY) Ltd.
Total consideration for the sale of the remaining 78.75% interest in Cliff Head is approximately $15 million, which will enable Triangle to pursue growth opportunities in the conventional oil and gas space, with a particular focus on exploration in the Perth Basin.
The transaction via the purchase of Triangle subsidiaries including Triangle Energy (Operations) Pty Ltd (TEO), which is the operator of the Cliff Head Field, is expected to complete by early in 2024.
To pursue separate strategies
This will allow Pilot to separately pursue its energy sector strategy and complete the transformation of the facility to a Carbon Capture & Storage (CCS) project.
It is expected to allow Pilot to introduce key strategic partners to fund the development and participate in the broader Mid-West Clean Energy Project in West Australia.
Triangle will also retain exposure to the CH CCS Project through a royalty of up to $7.5 million, which forms part of the consideration within the revised sales and purchase agreement.
Aim to be mid-cap company
Triangle’s managing director Conrad Todd said: “We are pleased to have revised the sale and purchase agreement with Pilot, which leaves Triangle Energy Global to pursue its aim to become a mid-cap oil and gas company that offers growth through a combination of domestic and international conventional petroleum production and exploration projects.”
Existing TEO employees will continue to work on the Cliff Head field as it transitions from oil production to the CCS project while Triangle will also support the ongoing operations of the oil field until the transaction completes.
“In the interim period between signature and consummation of the agreement, Triangle will continue to support the operation of the Cliff Head oil field and Pilot’s efforts to secure the transition to carbon sequestration,” Todd said.
"As a result of this deal, Triangle’s improved balance sheet will allow it to focus on existing and new projects including the upcoming Perth Basin drilling program.”
Revised agreement
The revised agreement supersedes the previous arrangements under which Pilot was to increase its interest in the Cliff Head Oil Field JV to 60% and become full operator upon receiving National Offshore Petroleum Titles Administrator (NOPTA) approval of a Declaration of Formation for carbon capture and storage covering WA-31L.
Pilot’s executive chair Brad Lingo said: ”The acquisition of the Cliff Head facility will enable Pilot to effectively pursue its innovative carbon capture project together with its integrated Mid-West Clean Energy Project.
"Pilot’s ambitions are being met methodically and this is yet another milestone achievement in the company’s growth strategy.
"Completion of the acquisition will enable Pilot to introduce strategically aligned partners into the project as well as financial investors to fund the proposed development.
"This will be the first offshore CCS development in the Mid-West, is an important clean energy development in Western Australia and will be one of the world’s leading CCS projects."
Consideration
The consideration to be paid by Pilot to Triangle is expected to total approximately $15 million over the CCS project life and will be staged: