Whitebark Energy launches sale/farm-out process for non-core Western Australian gas field

Whitebark Energy Ltd (ASX:WBE) has started a formal process for the sale or farm-out of its non-core 100%-owned Warro gas field, 200 kilometres north of Perth, Western Australia. The company is evaluating opportunities to maximise the full potential, and value for shareholders, of Warro, whilst retaining a focus on its oil & gas business in Canada. Market interest in significant undeveloped gas resources in the WA has improved markedly in the last 12 months, particularly since the lifting of the Fracturing Moratorium in WA in 2019. “Realising value” Whitebark Energy managing director David Messina said starting the process was a culmination of a strategic review of the asset over the last 12 months together with increased interest in the project in the current WA gas market environment. He said: “The Warro field contains an enormous amount of gas, but it requires an operator with the expertise to commercialise a technically challenging field and leverage off the work that has already been undertaken. “Whitebark has had success at the Wizard Lake Oil Project in Canada and will continue to focus there. “The lifting of the Moratorium in WA and the increasing interest in new gas sources in WA means that we can identify and consider options on how best to develop and realise value from our remaining Western Australian asset.” Whitebark has appointed Adelaide Equity Partners to facilitate the sales process and may consider an outright sale, farm-in or an alternative transaction structure. Right time right place Several factors combined to convince Whitebark that it was the right time to market Warro including: A suitable drilling rig is now active in the Basin (Ensign 970) which should be available in the future to drill Warro without large relocation costs; Changing dynamics in the supply of domestic gas from looming changes in the North West Shelf; and A recent application to drill and hydraulically fracture a well in the Canning Basin by Black Mountain Oil and Gas/Bennett Resources Pty Ltd which provides a pathway through the regulatory framework following the lifting of WA’s hydraulic fracture moratorium. WA market conditions Along with the lifting of the Fracturing Moratorium in WA in 2019, there have also been other recent developments which provide encouragement to realise value from Warro. There has been support from the WA Government for Perth Basin gas field developer Strike Energy Limited through the award of Lead Agency Status, advances in completion techniques which provide opportunity to revisit the field, as well as renewed interest by Talon Petroleum Ltd (ASX:TPD) in the Cattamarra sands at Walyering - a reservoir unit which is also present at the Warro field location. Location of the Warro gas field Warro gas field The project is ideally situated just north of the large 650 Terajoule per day Perth market and is 30 kilometres east of both the Dampier-Bunbury Natural Gas Pipeline and the Dongara-Perth Parmelia Pipeline – giving it full access to the 1,200 Terrajoule per day Western Australian gas market. The Warro reservoir section is about 3,750 metres below surface and has a thickness of around 500 metres, with gas held within low porosity and low permeability Jurassic sandstones. In addition, an approved pipeline licence and a Native Title Agreement with the Yued people allows for field operations through development and production to take place.