Pilot Energy Ltd. reported Wednesday that the Company has executed an agreement with Empire Oil & Gas NL (Empire) to farmin to Empire’s EP416 and EP480 exploration permits, situated within the Perth Basin, Western Australia.
Under the terms of the agreement, Pilot Energy will pay the cost of Empire’s recently completed airborne geophysical survey of the permits, by paying an initial $105,330 (AUD 150,000) to Empire. A further $210,660 (AUD 300,000) will be payable upon the parties satisfactorily negotiating amendments to the permit terms with the regulatory authority (in order to optimize the exploration program for the permits, and anticipated to occur early second quarter of 2016). At that point Pilot Energy will earn a 60 percent interest in EP416 and EP480, and assume operatorship of both permits. Pilot Energy will also fund Empire’s share of permit-related costs (excluding seismic and drilling costs) for a period of 24 months.
Pilot Energy Chairman, Gavin Harper commented on the transaction as follows: “This transaction represents Pilot Energy’s third acquisition in the space of only 10 months, with EP416 and EP480 providing a substantial footprint within an exciting and emerging hydrocarbon province, under favorable commercial terms. We look forward to working with the Empire team in order to further evaluate and explore the permits.”
EP416 and EP480 offer the opportunity for low cost onshore gas exploration, with significant prospective resources already identified. The permits host existing gas infrastructure and are near to an area of high demand for domestic gas by industrial users. The new permits complement Pilot Energy’s other exploration assets within Western Australia, creating a balanced portfolio of conventional exploration assets offering the full range from low cost onshore gas exploration, through shallow water oil exploration (WA-503-P) to very high potential deepwater gas and oil exploration (WA-507-P).
Consistent with Company strategy, Pilot Energy has secured a material interest in EP416 and EP480 as Operator and with a low cost of entry.
The onshore Perth Basin is a proven hydrocarbon province that has been the subject of significant industry interest since the recent Waitsia gas/condensate discovery by AWE Ltd. The basin is generally prospective for gas (with some oil and condensate) and is well served by gas distribution infrastructure, with the Dampier to Bunbury gas pipeline running almost the full extent of the basin (and directly across EP416 and EP480).
Exploration of the basin to date has been primarily focused to the north, with the southern portion having only been lightly explored. However, the limited drilling that has occurred in this part of the basin does confirm the presence of geological formations that comprise the hydrocarbon play to the north, with mature gas-prone source rocks underlying clastic reservoir formations.
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