Triangle Energy Sells Cliff Head Project Stake to Pilot Energy
TEG (TEG) Share Update July 2024 Monday 22nd
Triangle Energy Finalizes Sale of Cliff Head Project
Triangle Energy Global Ltd (ASX:TEG) has announced the finalization of revised terms for the sale of its 78.75% interest in the Cliff Head Project to Pilot Energy Limited (ASX:PYG). The deal includes up to $16 million in staged payments and a royalty, marking a significant shift in the company's focus towards new drilling projects in the Perth Basin.
Instant Summary:
- Triangle Energy to receive up to $16 million in staged payments and royalty.
- Cliff Head Project to enter Non-Production-Phase (NPP) from August 2024.
- Focus shifts to upcoming Booth-1 and Becos-1 wells in the Perth Basin.
- Pilot Energy to reimburse operating expenses from August 2024 until settlement.
Revised Terms of the Sale
Under the revised terms, Triangle Energy will receive up to $16 million over the life of the Carbon Storage project. The payments are structured as follows:
- $4.5 million in staged payments between mid-October and 31 December 2024.
- $4.0 million upon issuance of a Greenhouse Gas Injection License by NOPTA.
- Up to $7.5 million in royalty payments from the Carbon Storage project.
Triangle will sell its interests in the Arrowsmith land and facilities for $4.5 million, to be paid in staged payments. Additionally, Triangle will transfer its remaining interests in the Cliff Head Joint Venture (CHJV) for $4.0 million. The completion of these transactions is conditional upon Pilot securing sufficient funding and regulatory approvals by December 2024.
Non-Production-Phase (NPP)
Starting August 2024, the Cliff Head oil field will enter a Non-Production-Phase (NPP) to prepare for its conversion to a carbon storage project. This phase will involve suspending the wells, flushing pipelines, and cleaning storage tanks at the Arrowsmith Facility. This transition aims to significantly reduce operating costs until the conversion is complete.
Focus on Perth Basin Drilling
With the divestment of Cliff Head, Triangle Energy will focus on drilling the Booth-1 and Becos-1 wells in the Perth Basin. The Ventia 106 rig is currently being mobilized to the Booth-1 well location, marking the beginning of an active period for the company.
Management's Perspective
Triangle's Managing Director, Conrad Todd, expressed satisfaction with the finalized sale agreement. He highlighted that the increased consideration and reimbursement of operating costs are significant steps forward for both companies. Todd emphasized that this move will allow Triangle to focus on its highly prospective conventional oil and gas activities, including the upcoming wells in the Perth Basin.
The sale of the Cliff Head Project will remove associated liabilities from Triangle's balance sheet, potentially improving its financial health. The focus on new drilling projects in the Perth Basin could attract investor interest and positively impact the company's stock. However, the success of these new projects will be crucial in determining the long-term impact on Triangle's stock price.
Investor Reaction:
Analysts have noted that the divestment aligns with Triangle's strategy to streamline its portfolio and focus on high-potential projects. Investor reactions have been cautiously optimistic, with some expressing interest in the upcoming drilling activities in the Perth Basin.
Conclusion:
Investors should monitor the progress of the Booth-1 and Becos-1 wells and the completion of the Cliff Head sale. Triangle Energy's ability to successfully transition to new projects will be key to maintaining investor confidence and driving future growth.