AWE Limited announced Thursday that it has signed a Farm-in Agreement to acquire a 40 percent working interest in Block 09/05, Offshore Bohai Basin, China, from a wholly owned subsidiary of Roc Oil Company Limited.
Block 09/05 is located in the western part of the prolific Bohai Bay Basin in China, approximately 6.21 miles (10 kilometers) southeast of Tanggu, the largest port in China. The block covers an area of 129.3 square miles (335 square kilometers) with water depths from approximately 16 feet to 32 feet (5 meters to 10 meters). The block has the benefit of low drill and development costs, proximity to existing infra-structure and attractive fiscal terms.
Under the terms of the Farm-in Agreement, AWE will pay ROC $2 million for past costs, 60 percent of the first exploration well and 54 percent of the second exploration well. Should drilling costs exceed the initial gross estimate of $14.7 million per well, AWE would then contribute at a 40 percent working interest.
The first exploration well, QK11-1-1, was spud today and will test a low risk, material size prospect that is covered by recently acquired, excellent quality 3D seismic survey data.
Several other prospects and leads have been identified within the block, providing significant follow-up potential for the second commitment well, anticipated in 3Q calendar year 2015.
The transfer of interest to AWE is subject to normal regulatory approvals.
Managing Director, Bruce Clement, said: “This farm-in represents an important milestone and provides an ideal platform to expand into China. The opportunity is consistent with AWE’s exploration strategy to strengthen our prospect inventory by adding quality acreage within the Asia region. AWE believes that the partnership with ROC (an established operator within China) will provide mutual benefits to both companies.”
The Joint Venture partners in Block 09/05 are:
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