Woodside Petroleum has handed BHP Billiton a major stake in a key Pluto LNG exploration project after agreeing to offload a 40 per cent share in the high-impact Banambu Deep prospect.
In return for funding a capped amount of the drilling costs for Banambu Deep-1, which is due to spud this month, BHP will become the biggest investor in Carnarvon Basin permit WA-389-P and potentially a participant in Woodside's plan to expand the $14.9 billion Pluto foundation project.
Woodside, which will remain the permit operator with a 25 per cent stake, has identified Banambu Deep as a key target for extra gas to justify the development of a second Pluto processing train.
Cue Energy Resources is the other investor in the permit with a 35 per cent stake but has a pre-emptive right to acquire the 40 per cent stake that BHP plans to acquire.
The Banambu Deep prospect is on trend with Pluto and Chevron's Wheatstone LNG projects.
BHP's farm-in provides a change of tack from an intense focus by the resources giant on shale gas opportunities in the US. However, a slump in US gas prices because of the sudden abundance of shale gas has promoted some analysts to question BHP's strategy.
BHP is a partner in the Woodside-operated North West Shelf and Browse assets. It also owns a half-share of the Scarborough gas field, which is seen as a potential feed for a Pluto expansion, and is building the $1.6 billion Macedon domestic gas project near Onslow.
BHP's farm-in comes a day after the Federal Government awarded 10 new offshore permits off WA that will trigger $190 million of exploration investment over three years.