Australia's Ambassador Oil and Gas Ltd. announced Tuesday that its farm-out of a 52.5 percent working interest in its highly prospective petroleum exploration license (PEL) 570 exploration permit in the Cooper Basin (South Australia) to New Standard Energy Ltd. for $38.8 million (AUD 42.5 million) in direct exploration expenditure has moved a major step closer to completion.
The deal, representing an implied value of $0.24 (AUD 0.27) per Ambassador share (not including cash reserves and U.S.A acreage), also brings the expertise of US shale industry pioneer, Magnum Hunter Resources Corp. (MHR), to bear in the hunt for the high liquids content/low carbon dioxide (CO2) gas targets known to exist in Cooper Basin permit PEL 570.
New Standard Energy shareholders have overwhelmingly approved the farm-in leaving just a final regulatory step of South Australian Government approval to be completed.
The entry of Magnum Hunter as technical adviser to the exploration of the unconventional targets in PEL 570 has also been assured. Last week Magnum Hunter Resources subsidiary, Shale Hunter LLC (an MHR company) provided written assurance of technical advice and support for the proposed work program in PEL 570.
The PEL 570 farm-out deal, announced Dec. 10, 2013, supersedes an earlier Heads of Agreement between Ambassador and Outback Energy Hunter Pty Ltd, announced in August 2013, which carried an implied value of around $0.14 (AUD 0.16) per Ambassador share. Outback Energy Hunter is being acquired by New Standard Energy as part a broader corporate transaction which is due to complete in January 2014.
Ambassador Oil and Gas CEO, Tino Guglielmo, said, “This latest step finalizes the entry of one of the world’s leading shale gas and oil explorers into the Cooper Basin while Ambassador retains a very large stake in PEL 570. The final government and regulatory approvals are expected shortly.”
“Ambassador Oil and Gas shareholders can be very pleased that one of the world’s most experienced shale oil and gas explorers, in Magnum Hunter Resources, alongside New Standard Energy Ltd, will be applying their vast knowledge to assisting us unlock the value of the Patchawarra Trough region of the Cooper Basin.”
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