Rey Resources Completes Acquisition of 50% Interest in the Derby Block

Source: www.gulfoilandgas.com 6/2/2015, Location: Not categorized

Rey Resources has announced that its wholly owned subsidiary company Rey Lennard Shelf (RLS) has completed the acquisition of a 50% participating interest in petroleum exploration permit EP487 ('the Derby Block') from Backreef Oil. The Company has also entered into a Joint Venture Agreement (JOA) with Oil Basins, holder of the remaining 50% interest, for the operation of exploration programmes on the Derby Block, located in the Canning Basin of Western Australia.

The Derby Block is a large exploration licence of approx. 5,000 km2 that was granted to Backreef (50%) and Oil Basins (50%) in 2012. It occurs to the north of Rey’s existing interests in petroleum exploration licences the Canning Basin (refer map).

Managing Director Kevin Wilson said: 'The acquisition of a 50% interest in the Derby Block extends the Company’s footprint into acreage we consider prospective for both conventional and unconventional hydrocarbons. The Derby Block also has some of the best existing access infrastructure in the region, enabling relatively straightforward mobilisation activities. We look forward to working with Oil Basins to explore EP487.'

Key Terms of the Acquisition Agreement:
Pursuant to the acquisition agreement with Backreef, RLS has acquired Backreef’s 50% interest in the Derby Blocks for $2 million, to be paid on grant of a Production Licence or, at Rey’s election, a 2% royalty on future production. RLS has also agreed to settle certain outstanding claims on Backreef by Oil Basins in connection with past expenses incurred on management of the Derby Block amounting to approx. $391,000 and grant Oil Basins a 0.5% royalty over future production from RLS’ interest. The settlement of these claims has resulted in termination of all outstanding legal action between the parties.

Key Terms of the JOA
RLS and Oil Basins have entered into a JOA with the following key terms:
- Oil Basins will act as operator until 1 January 2016, at which time RLS will assume operatorship of the Derby Block, subject to certain preconditions;
- until 1 January 2016, Oil Basins will seek to farmout an interest in the permit and Rey will participate in the farmout subject to certain commercial terms being achieved, including funding of the first two years’ of the permit workplan on a 2 for 1 basis. This would result in both RLS and Oil Basins diluting to a respective 25% interest with the farminee at 50%; and
- other terms and conditions usual for an agreement of this sort.


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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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