Armour was notified it was successful in the recent Queensland petroleum acreage release tender and had been notified by the Queensland Department of Natural Resources, Mines and Energy that it is the preferred tenderer for PLR201718-2-4 on the Roma Shelf, in the Surat Basin.
The company describes the block as "highly prospective for gas and liquids" and said there would be great benefits from the proximity of Armour's gas pipeline infrastructure which traverses the newly awarded exploration block.
While the Queensland government has been releasing acreage under the condition it is developed to address domestic supply Armour's new win is not required to be developed specifically for domestic supply - however the company told Energy News the gas and liquids produced from the nearly acquired 150 sub-blocks would be provided for the domestic market.
"The award of this tenure adds to our plans for the reinvigoration of the large Permian gas and condensate plays of the Surat Basins. Our current activities are demonstrating that the conventional reservoirs of the Surat still have a long-term future in producing oil and natural gas for Eastern Australia," Armour CEO Roger Cressey said in a statement to the market this morning.
At present the nearby Kincora project produces more than 9 terajoules of gas per day and the company looks to increase its production to more than double that over the next 12 months as part of its Stage Four phase growth strategy.
Armour also currently produces 170 barrels of condensate a day and up to 19 tonnes of LPG a day from its Queensland acreage. The LPG produced is supplied for the Australian transport market and condensate produced is also kept for domestic supply.
Armour has already identified targets within the tenure that it aims to progress through its exploration program.
"We did a significant amount of work to demonstrate to government that the expression of interest should be released," Armour director Richard Fenton told Energy News.
"Our number one hunt is for gas, however given that these are liquid rich formations and conventional formations we do produce condensate, oil and LPG through the process."
The award follows an announcement by Armour this week that it had been forced to halt operations at its second well in its phase three growth strategy drilling program after a piece of equipment became stuck in its Myall Creek 5A well and was unable to be retrieved.
A side-track drilling operation is currently under way and Armour intends to complete the well and tie its production into the existing Myall Creek compressor station.
Earlier this month Industry bodies including the Australian Petroleum Production and Exploration association, welcomed the decision by the state government to open up more than 6,000 sq.km of unexplored acreage throughout gas-rich regions in Queensland for domestic supply.
"The news from Queensland only highlights the lost opportunities in Victoria and New South Wales; states which are more and more dependent on interstate gas supplies," APPEA chief Malcolm Roberts said at the time.
The oil and gas industry in Queensland State is expected to contribute more than A$447 million in royalties across this year alone. The Surat and southern Bowen Basins account for more than three quarters of the industry activity within the state.
On Tuesday at a speech to the Melbourne Mining Club Woodside Petroleum CEO Peter Coleman praised the government's domestic-only acreage awards as a way to ensure adequate local supply.
Armour had a share price of 8.9 cents per share and a market cap of $45 million.