Hibiscus Petroleum Berhad, a Malaysian exploration and production firm, reported Monday that its Australian partner 3D Oil Limited (3D Oil) has agreed to transfer a 20 percent interest in the VIC/P57 exploration permit located in the Gippsland Basin off Victoria, Australia to HiRex Petroleum Sdn Bhd (HIREX) -- in which Hibiscus Petroleum and Singapore-listed Rex International Holdings Limited each hold a 41 percent stake -- at a nominal cost. The Gippsland Basin is known to be the most oil-prolific offshore basin in Australia.
In a Heads of Agreement signed May 12 between 3D Oil, Carnarvon Hibiscus Pty Ltd (CHPL), Althea Corporation Limited -- a wholly owned subsidiary of Hibiscus Petroleum -- and HIREX, a further 5 percent interest in the VIC/P57 exploration permit is to be transferred to Hibiscus Petroleum as part of this transaction also at a nominal cost.
HIREX, the joint venture primarily between Hibiscus Petroleum and Rex International Holding and license holder of the proprietary Rex Virtual Drilling (RVD) technology, will apply the RVD to locate the best hydrocarbon prospects in the concession.
Using the RVD technology in the VIC/P57 exploration permit (which is believed to have multiple prospects) would allow the VIC/P57 partners to assess the best targets for drilling. RISC Operations Pty Ltd engaged by Hibiscus Petroleum in 2012, had estimated prospective resources of 11 million barrels of oil (MMboe) at Sea Lion, an exploration prospect in close proximity to the proven West Seahorse field. Other exploration prospects in VIC/P57, including Felix, provide further upside. An exploration well is planned to be drilled in VIC/P57 in the first half of 2015 and advanced plans are in place to confirm a rig to undertake the drilling operations.
As a second component of this agreement, CHPL has an exclusive option to increase its stake in the proven VIC/L31 West Seahorse oilfield from its current 50.1 percent to 100 percent at fair market value. The West Seahorse oilfield contains 6.5 million barrels of proven oil reserves and contingent resources of 1.5 million barrels of oil, as certified by independent expert Gaffney, Cline & Associates (GCA).
In the last quarter of 2013, the Field Development Plan for VIC/L31 was approved and a Production License over the West Seahorse oilfield was awarded to CHPL as Operator.
Under the final component of the agreement, CHPL will pay approximately $7.5 million to 3D Oil for its 49.9 percent share in the Britannia rig, which is already 50.1 percent owned by CHPL, thus providing CHPL with 100 percent ownership of the rig. The proceeds from the sale of the rig shall be used by 3D Oil to cover its share of the costs of drilling one exploration well in VIC/P57, planned for the first half of 2015.
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