Chevron Corp., the second-largest U.S. energy company, agreed to pay as much as $349 million to join Beach Energy Ltd. in a natural gas exploration campaign in central Australia in its first shale investment in the country.
Chevron will acquire as much as 60 percent of a permit in South Australia and 36 percent of a block in Queensland, Adelaide-based Beach said in a statement. The two blocks cover about 810,000 acres in the Cooper Basin, San Ramon, California-based Chevron said in a separate statement.
The U.S. oil producer joins ConocoPhillips, Statoil ASA, BG Group Plc and Hess Corp. in forming shale exploration partnerships in Australia, where the government estimates there are almost 400 trillion cubic feet of potential shale gas resources. That ranks Australia sixth in the world, according to a 2011 report from the U.S. Energy Information Administration.
“This agreement provides an opportunity to explore a new, prospective basin and potentially add to our natural gas portfolio,” Chevron’s Australia Managing Director Roy Krzywosinski said in the statement.
Chevron will initially pay Beach $36 million in cash and cover $95 million in costs for 30 percent of the South Australia permit and $59 million in cash for 18 percent of the Queensland acreage, according to the Beach statement. The Australian company may receive as much as $349 million over two stages that span several years, Beach said.