Triangle Energy has initiated legal action in the Supreme Court of West Australia against Acacia (L7), a subsidiary of Echelon Energy, alleging a breach of a farm-in agreement for the L7 permit in the Perth Basin. The company is claiming A$3.84 million for Echelon's share of the cost of a third exploration well stipulated in the agreement.

Background of the Farm-Out Agreements

Triangle holds a 50% operated interest in the L7 production licence and the adjacent EP 437 exploration licence. In 2023, it entered into separate binding farm-out agreements with Echelon Resources and Talon Energy, each for a 25% interest in both permits. Echelon's agreement encompassed expenditure for seismic data and the estimated cost of three wells.

Basis of the Dispute

Triangle asserts that Echelon has wrongfully withdrawn from the permit before drilling the third well, contravening what it considers a binding agreement. The operator states it attempted negotiations for the remaining costs without success. Echelon, however, rejects the allegations entirely. It contends its withdrawal was based on a technical and commercial assessment that the permits lack further prospectivity, and argues the farmout agreement did not create a firm obligation to drill a second well on L7 without a viable identified prospect.

Recent Drilling Results and Partner Withdrawals

The recent Becos-1 well on EP 437 and the earlier Booth-1 wildcat on L7 were both unsuccessful, failing to encounter economic hydrocarbons. Following these results, both Echelon and Strike Energy (which acquired Talon) signalled their withdrawal from the permits. Echelon has also claimed Triangle has not refunded underspent funds since its exit.

Other Legal Action and Future Plans

Triangle has also launched separate legal proceedings against Talon L7 for an identical claim of A$3.84 million, which Strike Energy intends to defend vigorously. Despite the partner withdrawals, Triangle believes there is significant remaining potential in the permits and is seeking new joint venture partners to drill a third well targeting the Mount Horner-2 Updip prospect. Concurrently, as part of an internationalisation strategy, the company has secured new offshore licences in the Philippines.