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Beach soars on Chevron exploration deal

Chevron Corp, the second-largest US energy company, has agreed to pay as much as $US349 million to join Beach Energy in a natural gas exploration campaign, in its first shale investment in Australia.

Chevron will acquire as much as 60 per cent of a permit in South Australia and 36 per cent of a block in Queensland, Adelaide-based Beach said today in a statement.

The two blocks cover about 810,000 acres in the Cooper Basin, San Ramon, California-based Chevron said in a separate statement.

The US oil producer joins ConocoPhillips, Statoil ASA, BG Group Plc and Hess Corp. in forming shale exploration partnerships in Australia, where the government estimates there are almost 400 trillion cubic feet of potential shale gas resources. That ranks Australia sixth in the world, according to a 2011 report from the US Energy Information Administration.

‘‘This agreement provides an opportunity to explore a new, prospective basin and potentially add to our natural gas portfolio,’’ Chevron’s Australia managing director Roy Krzywosinski said in the statement.

Beach rose 8.1 per cent to $1.40 in midday trade, the most in five months.

Chevron will initially pay Beach $US36 million in cash and cover $95 million in costs for 30 per cent of the South Australia permit and $US59 million in cash for 18 percent of the Queensland acreage, according to the Beach statement.

The Australian company may receive as much as $US349 million over two stages that span several years, Beach said.