WA-454-P Farm-out Agreement Executed with Origin Energy

Source: www.gulfoilandgas.com 7/22/2013, Location: Not categorized

MEO Australia Limited advises that its wholly owned subsidiary Drysdale Offshore Exploration Pty Ltd (Drysdale) has executed a binding farm-out agreement (FOA) in relation to WA-454-P with Origin Energy Resources Limited, a wholly owned subsidiary of Origin Energy Limited. The FOA is subject to customary Australian regulatory approvals and the finalisation of a Joint Operating Agreement.

Origin Energy will acquire a 50% participating interest in the permit by reimbursing 80% of the costs expended by Drysdale in the permit to date and funding 80% of the cost of drilling an exploration well on the Breakwater prospect. Origin Energy will become Operator of the permit. .

The untested cost of the exploration well is capped at A$35 million. A mechanism has been agreed to adjust the cap for US$/A$ exchange rate fluctuations from a 1:1 base. Costs exceeding this cap, including production testing (if required), will be funded by the parties according to their participating interests. .

The reimbursement of back costs will be made in two equal tranches of A$2.8 million. The first will be paid upon receipt of regulatory approval of the permit transfer and the second in July 2014.

MEOs CEO and MD Jrgen Hendrich commented on the announcement: We are delighted to have attracted Origin Energy as our partner to unlock the tremendous opportunities we see in WA-454-P. MEO considers the Breakwater prospect has the potential to host significant gas and possibly liquids resources which, in the event of exploration success, would readily feed into a growing regional gas market.

This project has evolved in a little over 2 years from acreage award in June 2011, acquisition of 3D seismic in early 2012, to the execution of a binding farm-in agreement in July 2013. It demonstrates MEOs business model of securing prospective acreage, adding value by undertaking diligent technical work and attracting a substantial partner to recover invested capital and fund the majority of drilling costs, while retaining a material residual interest. MEO will seek to defray the residual 20% cost exposure to Breakwater-1 prior to drilling.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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