SK agrees on farm-in for Caldita, Barossa

SK E&S (SK) has agreed to farm into the Caldita and Barossa gas discoveries operated by ConocoPhillips in partnership with Santos.

Offshore staff

ADELAIDE, Australia – SK E&S (SK) has agreed to farm into the Caldita and Barossa gas discoveries operated by ConocoPhillips in partnership with Santos.

Under the agreement, SK E&S, an affiliate of South Korean conglomerate SK Group, will earn a 37.5% interest in the fields, and will fund the first $260 million costs of a three-well appraisal program, expected to start next year.

Following completion of the program, SK will have the option to increase its interest to 49.5% by paying $60 million to Santos and ConocoPhillips.

In addition, SK will fund up to $90 million of pre-front-end engineering and design (FEED) and related activities, expected to begin in 2014. And the company will make the final investment decision and first LNG cargo payments of up to $110 million to the existing partners after certain milestones have been met.

Santos VP Western Australia and Northern Territory John Anderson said various development concepts would be evaluated during pre-FEED. “We will look at the option of floating LNG, as well as the possibility of a tieback development to our existing LNG plant at Darwin, either as an expansion of those facilities, the back-filling of Bayu Undan when it comes off plateau, or a combination of both.”

6/8/2012

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