Cooper Subsidiary Enters Farm-In Agreement for Romania Stake
Cooper announced that its wholly owned subsidiary, CE Bobocu Pty Ltd (CE Bobocu), has entered into a staged farm-in agreement with Zeta Petroleum (Romania) SRL (Zeta), a wholly owned subsidiary of Zeta Petroleum Limited (UK) (Zeta Petroleum), to earn up to a 50% interest in the Bobocu Gas Field on-shore Romania (Farm-in Agreement).
The Bobocu Gas Field is described in Cooper Energy's announcement of August 2, 2010.
The Farm-in Agreement replaces the Share Subscription Agreement and Joint Study and Bidding Agreement between Cooper Energy and Zeta Petroleum announced by Cooper Energy on August 2, 2010.
Subject to the satisfaction of certain conditions to the proposed acquisition by Key Petroleum Limited (Key) of all of the shares in Zeta Petroleum, the existing shareholding of Cooper Energy in Zeta Petroleum will be exchanged for Key shares.
The Farm-in Agreement is conditional on various matters, including:
- Implementation of the Key Proposal.
- Formal approval of the arrangement by the Cooper Energy and CE Bobocu boards of directors.
The drilling of the first well in the Bobocu Gas Field under the Farm-in Agreement is conditional on various matters, including:
- Key / Zeta Petroleum raising US $4 million to be made exclusively available for the purposes of the Bobocu Gas Field first well program.
- Zeta depositing US $2.24 million (of the US $4 million raised) in an escrow account.
Under the Farm-in Agreement, CE Bobocu will contribute farm-in costs up to a cap of US $2.24 million towards the first well in the Bobocu Gas Field.
All operations in relation to the first well will be operated by Zeta.
Following completion of the first well, CE Bobocu may elect to withdraw from the farm-in or to proceed.
If CE Bobocu elects to withdraw from the farm-in, CE Bobocu will be reimbursed from the escrow account all of CE Bobocu's expenditure on the first well.
If CE Bobocu elects to proceed, it will acquire (subject to governmental approvals and at no further cost) a 20% interest in the Bobocu Gas Field and have the right to earn up to a 50% interest in the Bobocu Gas Field.
CE Bobocu can surrender its right to earn in at any stage and will be entitled to retain the interest earned to that date. CE Bobocu will thereafter only be obliged to contribute its participating interest share of costs in respect of any further work on the Bobocu Gas Field.
Should it elect to proceed to each stage, CE Bobocu's financial obligations in relation to these subsequent programmes (in respect of which CE Bobocu will be the operator) are as follows:
|Drilling of additional well||$1.8MM, plus 30% of costs thereafter||To earn an aggregate 30% interest|
|Design of plant||$2MM, plus 30% of costs thereafter||To earn an aggregate 40% interest|
|Construction of plant||$7.4MM, plus 30% of costs thereafter||To earn an aggregate 50% interest|
Steve Twartz, Cooper Energy Exploration Manager, commented, "This revised arrangement provides CE Bobocu an option in the evaluation of the Bobocu Gas Field. Should the first well be successful, CE Bobocu will have preserved its risk managed options to earn further interests in the Bobocu Gas Field. Alternatively, should the first well not be successful, CE Bobocu can withdraw and it will have incurred no costs in respect of the first well."