Key Petroleum (Australia) pty Ltd. (Key or Company), a wholly owned subsidiary of Key Petroleum Limited, reported Thursday that Key and Caracal Exploration Pty Ltd (Caracal) have executed a binding Farmout Agreement for its North Perth Basin Exploration Permit EP437 in Western Australia with Rey Oil and Gas Perth Pty Ltd (Rey), a subsidiary of Rey Resources Limited.
As part of the Agreement, Rey will earn up to 43.47 percent in EP437 by contributing 86.94 percent of the costs. This cost is to be capped at $1.57 million (AUD 1.7 million) for the Dunnart-2 exploration well. Costs over AUD 1.7 million will be apportioned to the parties in accordance with their respective permit equity holdings. The Agreement is subject to a number of approvals, including foreign investment review board approval which is expected to be finalized in the coming weeks.
After the farmout of EP437 to Rey, the beneficial interests are as follows:
The Department of Mines and Petroleum (DMP) has granted approvals for the Operator's Health and Safety Management System. The Application to Drill has been lodged and is awaiting the final DMP approval confirmation.
The Land Access Agreement and turnkey Drilling Contract are in the final stages of being formalized with service and material contracts put to tender with the execution of these contracts due prior to drilling Dunnart-2.
The Dunnart Prospect is a structural closure against a fault and is defined by 7 seismic dip lines and one strike line. The well is located up-dip from Dunnart-1 with a planned drilling depth of 2,198 feet (670 meters). The prospect has a best estimate potential resource of 2 million barrels* of recoverable oil (MMbo) in the Early Triassic Bookara Sandstone. The Dunnart-1 well recorded excellent oil shows but was never tested.
Key Petroleum Managing Director Kane Marshall said he was delighted to welcome Rey to the EP437 Joint Venture.
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