New World O&G has signed two Farm-Out Agreements ('FOA') to acquire working interest in Licenses 1/09 and 2/09 ('the Licenses', or 'the Project'), totaling 4,107 sq km, located in the productive Jutland on-shore area in South Western Denmark ('the Danica Jutland Project' or 'the Project'). New World will be named Operator of the Project by means of addendums to the existing Joint Operating Agreements ('JOAs'). The Company has already commissioned a Competent Persons Report ('CPR') on the concessions, the results of which were positive, and were previously announced by the Company on 16 August 2011.
The first phase of a planned seismic acquisition program on the Licenses is due to commence in the second quarter of 2012, at an aggregate cost of US$1.25 million which will deliver an initial 12.5% working interest. The Company has the option, as set out below, to increase its working interest to 25% by the investment in further seismic data, and to 80% by funding the completion of one exploration well on each License.
The FOAs were agreed between the Company's wholly-owned subsidiary New World Jutland ApS ('NW Jutland')and Danica Jutland ApS ('DJ'), the joint-holder of the Licenses (dated May 17, 2009). DJ currently has an 80% working interest in the Licenses with a single partner, Danish North Sea Fund, which holds a fully-paying working interest in the remaining 20% of the Licenses. The FOA is subject to regulatory approval, expected within the next two weeks.
Key provisions of the above agreements:
New World CEO William Kelleher said, "This is another exciting step forward for our Company and adds a second prospective hydrocarbon project in the form of late stage low risk exploration to our existing Blue Creek concessions in Belize. Being named Operator under the Licenses by our partners with the full support of the Danish government further demonstrates confidence in our team's competence and commitment.
"As with Blue Creek, we intend to progress Licenses 1/09 and 2/09 through the development cycle and to this end we will shortly begin a two-phase 2-D seismic acquisition and interpretation program which will bring us one step closer to reducing geologic risk in the license area. This program, set out under our Farm-Out Agreement is designed to allow the Company to focus on high-grading subsurface prospectivity and reducing risk, prior to committing to the next seismic acquisition phase and completing our further Farm-In obligations. The recent CPR completed by RPS risks the Zechstein intervals at 1 in 8 and the Triassic at 1 in 5. This is in line with our previously stated goals of high-grading the leads in the license area under the PSA that are significant in size and potential, and which closely resemble existing producing fields to the south. Finally, we are also currently speaking with industry partners and considering the option of possibly farming down our interest in both projects in an effort to minimize future dilution and optimize our forward capital position."
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