MEO Australia Limited reported Wednesday that its wholly owned subsidiaries have executed an Option Agreement with an international exploration company (the Farminee) providing the Farminee with an option to farmin to any of the WA-488-P, AC/P50 and AC/P51 permits offshore Australia.
With regards to WA-488-P (which contains the giant Beehive prospect) the Option Agreement provides an option for the Farminee to acquire a 30 percent interest in the permit and be obligated to fund 30 percent of the forward expenditure in the permit. In the absence of MEO having a funding alternative, provisions are included for the Farminee to acquire an additional 10 percent equity in return for procuring full funding of a 3D seismic survey over the Beehive prospect (if required) and an additional 40 percent equity for procuring full funding of the proposed Beehive-1 well. If these provisions are utilized, MEO will have a full carry through a Beehive-1 well for its residual 20 percent participating interest.
Alternatively, in the absence of the exercise of the additional equity options, the Farminee also has the right to withdraw from the permit if MEO or its relevant wholly owned subsidiary has not entered into arrangements to fund its future work permit program prior to 4 months before the end of Permit Year 3.
MEO is pleased to advise that the Farminee has completed their technical assessment of WA-488-P and has immediately exercised their initial option to farmin for a 30 percent interest, which is subject to final board approvals. Final farmin documentation is scheduled to be completed within approximately 2 months.
With regards to AC/P51 (which contains the Ramble On prospect) or AC/P50, the Option Agreement provides an option to the Farminee to conditionally acquire a 30 percent interest in the applicable permit and be obligated to fund 30 percent of the forward expenditure in the permit. The conditions to the potential farmin provide that if there is an unfavorable outcome from the permit renewal process to be commenced later in 1Q 2015, the Farminee will be entitled to withdraw from either permit. The Farminee is currently undertaking their technical assessment of AC/P50 and AC/P51.
MEO's MD & CEO Peter Stickland, commented on the announcement:
"MEO's strategy is to farm down its North Australian permits in order to participate in the drilling of quality prospects at minimal cost to MEO.
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