New World O&G Completes Farm-Out Agreement for Denmark Acreage
New World Oil and Gas Plc announced that further to signing a Letter of Intent on December 23, 2011, it has completed a Farm-Out Agreement ('FOA') with Danica Resources ApS, to acquire an initial 12.5% but up to an 80% working interest in the highly prospective 2,479 square miles (6,420 square kilometers) License 1/08 ('the License') which includes both onshore and offshore acreage in Southern Denmark in the productive Western Baltic region of the South Permian Basin. Under the terms of the FOA, New World will assume operatorship of the License.
On January 25, 2012, the Company announced the highly positive results of a Competent Persons Report ('CPR') carried out by RPS Energy on the concession, that indicated, inter alia, that the already identified Als Prospect has P50 resources of 97 million barrels of oil and 1.401 TCF of gas with a Net Present Value ('NPV10') of $2.44 billion, underpinning the prospectivity of the License.
New World will be named Operator of the Project by means of an addendum to the existing Joint Operating Agreement ('JOA') between the current operator, Danica Resources ApS (80% working interest) and its single partner, Danish North Sea Fund, that holds the remaining 20% working interest. The first phase of a planned 93 miles (150 kilometers) 2-D seismic acquisition program on the License is due to commence in 2Q 2012 at an estimated cost of $1.4 million net to the Company's interest and will deliver an initial 12.5 percent working interest to New World. New World has the option to increase this to 80 percent at its discretion based upon the following provisions.
Key provisions of the above agreements:
- Permitting, acquisition, processing and interpretation of 93 miles (150 kilometers) of 2-D seismic to be completed by the end of the third quarter of 2012. This will deliver the initial 12.5 percent working interest in the License to the Company, and at this point the license holders must decide whether to drill a well based upon existing seismic data or acquire additional seismic data.
- Permitting, acquisition, processing and interpretation of 2-D and/or 3-D seismic by March 30, 2013 to properly delineate drillable prospects, in return for which New World will receive a further 12.5 percent working interest. Survey design(s) are to be agreed by September 30, 2013. If no further seismic is deemed necessary the 12.5 percent would be transferred to New World immediately.
- Provided a drillable prospect has been identified, one well to be drilled by the end of the third quarter 2014, in return for which New World would receive the remaining 55 percent working interest.
- If and when New World has assumed Danica Resources ApS's 80 percent working interest, Danica Resources ApS shall remain entitled to a 5 percent overriding royalty from any production of hydrocarbons. In addition, a further staged cash and share payment of $500,000 has been agreed between New World and Danica Resources ApS.
- Provided a drillable seismic-based prospect has been identified, New World has the option to drill an additional well to the base of the Zechstein and/or Rotliegend, as mutually agreed, by no later than September 30, 2015.
New World CEO William Kelleher said, "We are delighted to announce the completion of the transaction documents for the Danica Resources Project which adds a third project to our growing portfolio of highly prospective assets that includes our most advanced Blue Creek Project in Belize, with its combined P50 resource estimate of 294MMbbl and Estimated Monetary Value of $1.53 billion. This exciting addition increases our exposure to the productive South Permian Basin in Denmark to 4,057 square miles (10,507 square kilometers) and includes the Als Prospect which, on its own, has a P50 resource of 97 MMbbls of oil and 1.401 TCF of gas.
"The Als Prospect provides an enticing indication of the huge potential of the Danica Resources Project and, as a result, we are eager to explore the area further in the expectation of identifying additional sizable prospects. With this in mind, we look forward to commencing our seismic acquisition program shortly and will update the market on our progress in due course."