Oil and Gas Sector

Mr VAN HOLST PELLEKAAN (Stuart) (14:38): Supplementary sir, to the second question which the minister said that he would get an answer to and come back to the house with. My supplementary question is: when Ambassador repeatedly failed to meet its work programs, did the minister continue to believe that they were the best company to hold the exploration licence?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (14:38): Regarding the work program that resulted in year 1 of the program being pushed out to 2015, I suppose what the member is asking is: what is the benefit to the state of allowing delayed work programs?

Ms Chapman interjecting:

The Hon. A. KOUTSANTONIS: I'm going to answer that. In 2013, in August, Ambassador succeeded in obtaining extensive US shale development experience by attracting Outback Energy Hunter to take up a 70 per cent interest in petroleum exploration licence 570. Outback Energy Hunter agreed to pay all costs, including funding Ambassador's remaining 30 per cent share associated with the exploration work.

We encourage foreign direct investment in this state. I note that the member for Mitchell was complaining about foreign direct investment, but I do not know why he would. He claims that nothing has happened, the member for Mitchell claims that nothing has happened. Outback Energy Hunter successfully secured the remaining 30 per cent share associated with the exploration work program to satisfy the first five-year term of PEL570 up to a maximum of $50 million. This strategic farm in led to Outback Energy Hunter taking a 52 per cent interest in petroleum exploration licence 570 in February 2014.

Outback Energy Hunter's parent company, New Standard Energy, purchased producing and prospective acreage in both the Eagle Ford shale in onshore Texas from Magnum Hunter Resources and 52.5 per cent of petroleum exploration licence 570 in the state's Far North, funding the first $42.5 million of the primary work program.

In terms of the current state of play for PEL570, based on market announcements New Standard Energy acquired Outback Energy Hunter's stake in PEL570, as announced on 10 December 2013, and on 29 October 2014 Ambassador was delisted following a compulsory acquisition by Drillsearch. On 29 October New Standard announced that it had completed its farm out of 35 per cent of petroleum exploration licence 570 to Santos. In return, Santos will meet 75 per cent of New Standard's expenditure commitment associated with New Standard's $42.5 million farm in obligations to Drillsearch (formerly Ambassador Energy), of which $300,000 has been spent. Santos (35 per cent) will operate PEL570 with joint venture parties New Standard Energy (17.5 per cent) and Drillsearch (47.5 per cent).

A significant work program by very experienced companies in a joint venture operated by Santos is the result. That is a good result for the people of this state and that is a good result for the Cooper Basin, but I suppose good news in the oil and gas industry is not what the opposition is interested in.