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BHP a ‘natural buyer’ of Santos’ Dorado oil project

Cashing in: Origin sells down share of APLNG
Cashing in: Origin sells down share of APLNG

Santos is seeking buyers for a share in its $2 billion Dorado oil project offshore Western Australia and energy consultancy Rystad Energy expects BHP will be looking closely at the asset.

Most of the natural buyers for the Dorado oil project have exited Australia. This leaves local company BHP as the “natural buyer” for a share in the Santos-led development, Jimmy Zhang, an upstream analyst at Rystad told a webinar today.

Zhang added that some “unfamiliar faces” from overseas could also show up. “EOG might consider a non-operated stake in a pure play oil project,” said Zhang.

US-based EOG Resources made its first foray in Australia after buying 100% stake in the high-risk Beehive prospect that could hold up to 1.4 billion barrels of oil equivalent (boe) in April. Beehive is potentially the largest undrilled hydrocarbon prospect in Australia.

US heavyweight EOG bets on Beehive offshore Australia

Zhang said that the Dorado sale offers investors the opportunity to buy into a high-quality asset with high-margin barrels and a lot of condensates. Dorado lies in the Bedout Sub-basin, which has proven exploration potential.

Santos last month started front-end engineering and design (FEED) for Dorado.

Investors wanted

Santos, which has an 80% operated interest in Dorado, is seeking buyers for a 20-30% stake in its large Dorado oil project and Bedout exploration portfolio offshore western Australia estimated to be worth up to $200 million. The remaining interest is held by Australia’s Carnarvon Petroleum.

Dorado has around 150 million barrels of contingent resources in the exciting Bedout basin offshore northwest Western Australia.

Rystad Energy is estimating a 20-30% stake in the Dorado discovery to be valued between $100 to $200 million.

The offer comes with high-graded exploration prospects, Apus and Pavo, which Santos plans to drill in late 2021/22 and other significant exploration potential. The Bedout basin holds prospective resources of 990 million barrels of oil equivalent, about half of which is estimated to be oil.

The Dorado oil and gas discovery sits in the WA-437-P exploration permit in the Commonwealth waters offshore Australia.

Carnarvon said last month that is “has engaged advisers to fund its share of the development and will formally engage with financiers once FEED contracts for the FPSO and platform have been finalised. There continues to be strong market interest in the project.”

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