Upon completion, Hancock will acquire 100% of EP 368 and EP 426. Credit: Mineral Resources.

Mineral Resources has announced a significant A$1.1bn ($722.6m) agreement with Hancock Prospecting for its Perth Basin gas exploration permits.

The deal includes the sale of Exploration Permits 368 and 426 and the formation of joint ventures (JVs) for additional exploration acreage in the Perth and Carnarvon basins.

Under the terms of the agreement, Hancock will pay up to A$1.13bn in cash to Mineral Resources.

This includes an upfront payment of A$804m for the exploration permits, with completion due by the end of 2024.

Additional adjustments of A$327m are contingent upon reaching resource milestones at the Moriary Deep Prospect and Lockyer Gas and Erregulla Oil discoveries. The Moriary-2 well drilling is set to commence in November 2024, with further definition drilling scheduled for fiscal year 2025.

The transaction’s completion is subject to several conditions including ministerial consents.

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Upon completion, Hancock will acquire 100% of EP 368 and EP 426 and also grant a 50% share in Mineral Resources’ remaining permits in the Perth and Carnarvon basins.

Mineral Resources will retain a 50% interest and continue to operate the Exploration JV assets, with Hancock providing initial funding for the Carnarvon Basin’s high-priority work programme.

Should a commercial discovery be made, Hancock has committed to funding all post-final investment decision development costs for the Exploration JV assets, with Mineral Resources’ interest carried at a commercial interest rate.

Mineral Resources will serve as the operator of the Exploration JV and will be responsible for exploration and drilling services at cost.

Additionally, half of the Explorer drill rig, mobile village and ancillary equipment will be purchased by Hancock for approximately $17.6m. This will further reduce the ongoing operating costs for Mineral Resources.

JP Morgan was engaged by Mineral Resources to assist with the transaction process, ensuring a strategic approach to maximising the value of its gas exploration assets.

Mineral Resources chief executive energy Darren Hardy said: “MinRes and Hancock have a long history built on a strong relationship and I am excited that we are again deepening our ties, this time in energy.

“This transaction maximises the value of our exploration success for shareholders and again showcases our ability to unlock significant capital from MinRes’ portfolio of assets.

“The new exploration joint ventures with Hancock in the Perth and Carnarvon basins immediately derisk and accelerate our future exploration programmes across this highly prospective onshore petroleum acreage.”