tap oil hunts for acquisitions in se asia

Topics:Company News & Earnings.On Thursday 20 January 2011, 19:45 EST

Tap Oil Ltd says it is on the hunt for acquisition opportunities, particularly in the Asia-Pacific region, after pipping Woodside Petroleum Ltd to secure a slice of a promising permit in Western Australia.

Tap Oil on Thursday revealed it had increased its stake in the gas-prospective WA-351-P permit in the offshore Carnarvon Basin from 25 per cent to 45 per cent.

It secured the additional 20 per cent stake from ROC Oil Company Ltd, which in December agreed to sell the interest to Woodside for $US15.75 million in cash.

But Woodside is not a party to the existing joint venture and Tap Oil exercised a pre-emptive right to bid for ROC's stake, offering the same terms as Woodside.

Tap Oil chief executive Troy Hayden said the permit had the potential for two to four trillion cubic feet of gas, which would be sought after by major energy companies as feedstock for a liquefied natural gas (LNG) plant.

"We think it was a little undervalued, so we got a pretty good deal and it gave us a seat at the table with those big LNG players," Mr Hayden told AAP.

"It lets us farm down later on or maybe do an asset swap.

"There's a range of opportunities that we probably didn't have at 25 per cent.

"I don't think we would go into a drilling campaign or a development phase holding that much (45 per cent) equity.

"What we really want to do is generate some interest from some of those big LNG guys like the Chinese and Japanese.

"That greater North West Shelf area is pretty hot and there are so many LNG projects on the go."

Mr Hayden said it was likely Tap Oil would not sell out completely of the permit, retaining a stake of 10 to 20 per cent to remain exposed to its upside.

He said the company was in a comfortable cash position following an equity raising last year and was seeking new opportunities.

"We try not to have our fingers in too many pies, but we're certainly having a good look around on bookable reserves or producing assets.

"We're not trying to bat out of our league, but at the moment it seems like a good time as there are a few things around in that South East Asian region.

"And with this WA-351-P holding, we could perhaps do an asset swap with someone.

"Some of these major players might have something that is coming off the level of production that they like to have but is not immaterial to us.

"So we could do a deal and not have to pay any cash at all."

BHP Billiton Ltd's petroleum division remains the operator of the WA-351-P permit, which is in deep water, with a 55 per cent stake.

Tap Oil is already active in the Carnarvon Basin, participating in a gas joint venture on Varanus Island with Apache Energy Ltd.