Earlier this month I discussed the billions of dollars in investment capital lining up for natural resources.
Much of that cash is earmarked for energy. With one of the most-watched vehicles being American Energy Partners (AEP) — a $14 billion start-up headed by Aubrey McClendon, former head of U.S. shale giant Chesapeake Energy.
And late last week, the market got some surprising news about where this shale insider is deploying his big funds.
On Thursday, Australian junior E&P Armour Energy announced it had signed a letter of intent with AEP — focusing on the company’s acreage in the McArthur Basin of Australia’s Northern Territory.
The deal is a big one. With AEP agreeing to pay $100 million in work commitments in order to earn a 75% interest in Armour’s tenements. Suggesting that AEP’s management likes what it sees in the McArthur Basin, and is willing to pay up for it.
In return, AEP will get access to a dominant land position in the basin — with the joint-ventured land package covering 21.5 million acres.
And there have already been some intriguing results to support the unconventional potential here. With wells on the tenements having flowed up to 3.3 million cubic feet per day of natural gas.
As I’ve discussed previously, Australia has long been pegged by industry insiders as the next story for unconventional oil and gas. Because of the country’s well-developed industrial sector, and its regulatory openness to resource development.
The new AEP deal is a major confirmation of the potential here. Making this a place to watch for news on drill testing and development over the coming months.
AEP and Armour Energy still have to finalize their JV arrangements. If and when they do, keep an eye on Armour (which is a public company) for results here.
Here’s to sneaky shales,
[email protected] / @piercepoints / Facebook