The REY Resources Limited (ASX: REY) share price remains flat today despite the company releasing its quarterly activities report, highlighting a new deal with Origin Energy Ltd (ASX: ORG).
The REY Resources share price is 27 cents and hasn't moved a cent for the past week.
REY Resources is an exploring and developing energy resources company. It operates in two segments, mineral exploration and development and petroleum exploration in Western Australia. REY is currently focused on developing its oil and gas interests in the Canning and Perth Basins.
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REY Resources and Origin Energy's deal
The Fitzroy Blocks are an oil and gas field located in the Canning Basin in the northwest of Western Australia. On 21 December 2020, REY Resources and its fellow Fitzroy Blocks explorers, Buru Energy Limited (ASX: BRU) signed a legally binding letter of agreement with Origin.
In the agreement, both Buru and Rey will farm out 20% of their respective participating interests to Origin. Origin will need to fully fund several work programs. These include 2D seismic work with total costs of $3 million across the two permits in 2021 and, optionally, one well drilling before 2025.
Subsequently, Origin has been assigned 40% participating interests in the Fitzroy Blocks and the current interests of REY, Buru and Origin in the Fitzroy Blocks are now 20%, 40% and 40% respectively.
REY's other gas and oil interests
REY still holds a 100% interest in the Lennard Shelf Blocks, although, due to the licence application withdrawn by Buru, REY is now seeking another method for its oil disposal from the region. REY also holds a 100% interest in a petroleum exploration permit in the Derby Block.
REY will also acquire up to 75% equity interest in Australian gas explorers SouthnA, which holds significant interests in the Surat Gas Project, illustrating a busy period for REY Resources and the constantly fluctuating ownership of exploration territory in Western Australia's mining regions.
REY Resources has relatively high hopes for the Surat Gas Project. Some of the production licences for the project historically had good production history, from five wells in total since the 1980s.
These wells were shut down in 2012, due to the suspension of one gas processing plant. Based on current studies, REY believes that the 3 Avondale wells in and one Deepwater well have good potential for gas production using existing flowlines. Many prospects also have not been tested.
REY Resources share price snapshot
The REY Resources share price has risen 12.5% over the past month and 25% over the past 12 months, beating the overall energy sector by 4%.
