New Standard Energy Ltd (New Standard) reported Thursday that it has divested part of its interest in PEL 570 in the Cooper Basin, South Australia, to Santos Ltd (Santos), to significantly reduce its exploration expenditure commitments while retaining exposure to the development of the large and prospective permit.
The transaction enhances and focuses New Standard’s balance sheet on the Company’s primary growth target, the development of its Eagle Ford shale assets in Atascosa County, Texas.
New Standard will retain a 17.5 percent working interest in PEL 570 in return for a cash consideration of $6.5 million (AUD 7.5 million) coupled with a commitment from Santos to meet 75 percent of New Standard’s remaining expenditure commitments associated with the $37.2 million (AUD 42.5 million) earn-in obligations - of which approximately $0.26 million (AUD 0.3 million) has been spent to date.
Assuming the earn-in obligations are fully met, the total benefit to New Standard will be $34.28 million (AUD 39.15 million). Post the cash consideration, New Standard’s net expenditure equates to as little as $2.67 million (AUD 3.05 million) whilst retaining a 17.5 percent working interest in PEL 570. Operatorship has been transferred to Santos.
This deal will bring together a powerful consortium of Santos, Magnum Hunter Resources Corporation (Magnum Hunter), New Standard and Drillsearch Energy Ltd (Drillsearch) to explore and develop PEL 570. Importantly the transaction also removes the majority of funding commitments for New Standard moving forward and establishes a clear pathway to commercialization for potential future development of PEL 570 alongside two experienced Cooper Basin operators in Santos and Drillsearch.
Completion of the transaction remains subject only to statutory and regulatory government approvals, and upon completion the following permit interests will be held in PEL 570:
* Operated interest
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