Australia's 3D Oil has agreed to a $28 million (AUD27 million) farm-in deal with Malaysia's Hibiscus Petroleum that will allow it to progress the development of the offshore West Seahorse oil field in permit VIC/P57, Victoria, 3D Oil revealed in a corporate presentation Wednesday.
The agreement is subject to approval from Hibiscus' shareholders and the Foreign Investment Review Board. It also requires a waiver from the Australian Securities Exchange.
Under the agreement, Hibiscus will take a 50.1 percent operating stake in VIC/P57. In addition, Hibiscus will subscribe for 30.96 million shares in 3D Oil. The shares are valued at $2 million (AUD 2 million) and 3D Oil will give Hibiscus a 13 percent stake in 3D Oil.
"This deal will be considered as a relatively small-sized one for Hibiscus," HWANGDBS Vickers Research Analyst Quah He Wei told Rigzone in an opinion comment.
West Seahorse Development
The funding from Hibiscus will be used to kick-start the development of the West Seahorse oil field, which involves the drilling of up to two appraisal wells, 3D Oil's presentations shows.
In addition, the joint venture is exploring the possibilities of building a mobile offshore production unit (MOPU) and a floating, storage and offtake tanker, which will be moored to a buoy.
MOPUs are converted jackup drilling rigs that can usually be installed within 12 months from contract awards. MOPUs can also be relocated quickly, which makes the rigs suitable for the development of oil fields with a short field life.
Since its renewal in August 2011, VIC/P57 is approximately 186 square miles (483 square kilometers) in size, covering a geologically diverse area of the Northern Terrace and the Central Deep areas of the offshore Gippsland Basin. It contains the West Seahorse oil field, located a few feet west of the producing Seahorse Field. A drill stem test in main oil zone of the 1981 discovery well, West Seahorse-1, flowed 1800 barrels of oil per day.
Sea Lion Prospect
The joint venture also targets to drill an exploration well in the offshore Sea Lion prospect, which is located west of the West Seahorse oil field. "It is a simple structural closure against the Rosedale Fault with the potential for oil at multiple levels. This play type has historically had a very high success rate in the Gippsland Basin," 3D Oil stated on its website.
Sea Lion has prospective resources of 20.7 million barrels of oil in the same reservoir units as at West Seahorse, data from 3D Oil's website shows.
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