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Conoco quits Kimberley hope

The Canning Basin in the Kimberley.

ConocoPhillips has joined the throng of resources giants pulling out of long-dated exploration plays, yesterday ending ambitions to discover oil and gas in Kimberley shales.

The US giant's decision, with partner PetroChina, to withdraw hands back outright ownership of the shale-prospective Canning Basin acreage to junior New Standard Energy.

It will also throw the spotlight on Hess and Apache, two other US players with exposure in the onshore area south-east of Broome. Both companies have faced pressure at home about reining in exploration spending and focusing on the core business, often onshore US gas.

"Yes, I guess we are disappointed but it also creates an opportunity and the timing is perfect for us because we were already looking at farming out the rest of our (Canning Basin) acreage," New Standard chief executive Phil Thick said about ConocoPhillips' withdrawal.

ConocoPhillips had spent $30 million on New Standard's acreage, including drilling two wells, as part of a farm-in deal struck three years ago that would have netted it 75 per cent. The main attraction was New Standard's Goldwyer prospect.

PetroChina joined last year as part of a broader joint venture deal with ConocoPhillips.

New Standard has engaged Tim Woodall's Miro Advisers to run the farm-out process for its entire Canning Basin portfolio, which spreads across 63,400sqkm. Following ConocoPhillips and PetroChina's withdrawal, New Standard reverts to 100 per cent of its so-called Southern Canning project. It owns its other acreage outright.

Mr Thick said New Standard was open to all farm-out options.

"Our critical objective is to not spend any material money on this (acreage) but retain upside exposure," he said. "We are happy to push our investment out to relinquish some of our acreage."

Although New Standard began life as a Canning Basin hopeful, jostling with Buru Energy for line honours in the race to prove up the area's shale potential, the logistical and regulatory challenges of operating in the remote area and investors' lack of interest prompted Mr Thick to take the company on a different path.

Its primary focus is onshore US, where New Standard's acreage produces about 600 barrels of oil equivalent a day, with a target to boost the figure to 1500bpd by mid next year, and a medium-term growth position in the Copper Basin in South Australia.

New Standard shares fell 9 per cent yesterday to 9.1¢ before it announced ConocoPhillips' withdrawal.