Buru Energy Ltd. reported Wednesday that it has reached an agreement with Quadrant Energy Australia Ltd. (Quadrant) in relation to the Coastal Titles Farmin Agreement in Western Australia which was originally executed Nov. 1, 2013.
Under the terms of the agreement, Quadrant will withdraw from the Coastal Permits (EP390, 438, 471 and 473) and will pay the Buru Energy and Mitsubishi joint venture a gross sum of $7 million (AUD 10 million) or $6.9 million (AUD 9.8 million net to Buru Energy after adjustments), in fulfilment of its farmin obligations.
The terms of the original farmin agreement included a commitment by Quadrant (then Apache Energy) to fund a $17.6 milllion (AUD 25 million) exploration program on EP390, 438, 471 and 473. Through the farmin, Quadrant earned a 50 percent interest in these permits and Buru Energy and Mitsubishi each then held a 25 percent equity interest. Subsequent to the withdrawal of Quadrant, Buru and Mitsubishi will be the only holders of Coastal Plains.
The Coastal Plains are primarily located on the geological feature known as the Broome Platform with the Goldwyer Shale petroleum system being the principal exploration objective. Neither the Ungani trend or the Laurel Formation tight gas accumulation is present on these permits.
Subsequent to the Quadrant farmin, the joint venture drilled the Commodore 1 and Olympic 1 conventional oil exploration wells targeting Ordovician aged reservoirs sourced by the Goldwyer Shale. Although some hydrocarbon shows were encountered, the wells were non-commercial and were plugged and abandoned. The cost of these wells and other activities on the permits was substantially less than the $17.6 million (AUD 25 million) commitment farmin commitment by Quadrant.
The joint venture has now agreed with Quadrant that Quadrant will withdraw from the permits and will fulfill its remaining obligations to the joint venture by paying a gross $7 million (AUD 10 million), adjusted for JV expenditure during July. After adjustments, Buru Energy will receive some $3.4 million (AUD 4.9 million) in cash within receipt of the funds expected within 7 days.
Buru Energy's Executive Chairman, Eric Streitberg said:
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