Holloman Energy Corp. on Thursday announced its execution of initial farm-out agreements with respect to its Australian Cooper Basin holdings. In a Letter of Intent dated May 11, 2011, Holloman accepted the terms of a farm-out with an undisclosed party through which that party may earn a 44% working interest in Holloman's PEL 112 and PEL 444 licenses by funding approximately $17,000,000 to $19,000,000 in exploration and development expenditures.
"We are very encouraged by the progress we've made in our farm-out negotiations," stated Mark Stevenson, Holloman CEO. "We believe the scope of the commitments we've negotiated are sufficient to provide a strong exploration and development opportunity on our acreage."
Though Holloman intends to release more details in the upcoming week, it disclosed that the general terms of the farm-out included funding of the costs of 3D seismic acquisition and a multiple well drilling program on each of its licenses. In connection with the farm-out opportunity, Holloman has also entered into a participation agreement under which all current working interest holders will contribute a portion of their working interest in satisfaction of the 44% working interest which may be earned by the third party. Holloman anticipates it will retain a 40% working interest in its licenses.
Both the farm-out transaction and the participation agreement are subject to a number of conditions including certain approvals, and the execution of definitive agreements.
Holloman Energy Corp. is focused on exploring and producing oil in Australia's Cooper Basin. Holloman's Cooper Basin leases include interests in PEL 112 and PEL 444 which comprise 4,544 Sq km (1.125 million acres) in the southwest and northwest sectors of Australia's prolific Cooper-Eromanga Basin.
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