BG Group is a global natural gas business that is active on five continents in over 20 countries.

Karoon told EnergyReview.net that BG had beaten a field of international energy majors to seal the farm-in deal.

"There is a lot of interest in this area," managing director Bob Hosking said.

The England-headquartered farminee will earn its equity by funding 100% of the cost for a permit-wide high-resolution Aeromag survey and purchase of additional 2D seismic, as well as 90% of the cost of acquiring, processing and interpreting at least 400 square kilometres of a 3D seismic survey in each permit.

BG International will also fund 90% of the cost of drilling of one well in each permit.

The estimated gross cost of the exploration program is A$2.9 million for the 2D seismic and Aeromag survey, A$11.4 million for the 3D seismic, and A$57.2 million for the two exploration wells.

“Both Karoon and BG will undertake a prudent exploration program over the permits and have options to withdraw prior to the 3D seismic and drilling of the exploration wells,” Karoon said in a statement.

The permits are located less than 10km from the giant Scott Reef/ Brecknock gas and condensate fields complex, estimated by Woodside Petroleum to contain roughly 21 trillion cubic feet of recoverable gas reserves with 210 million barrels of condensate.

“Woodside has announced the drilling of three further wells [in the area] in 2005, an action which reflects the renewed industry interest in developing what were recently considered static resources,” Karoon said.

“Karoon’s mapping and geologic analysis demonstrates that the same play type with similar large structures on trend occur across Karoon’s WA-314-P and WA-315-P permits.”