Empire Energy Group Limited (the Company) reported Thursday that Definitive Agreements have been signed between Imperial Oil & Gas Pty Ltd., (Imperial) a 100 percent owned subsidiary of the Company and AEGP Australia Pty Ltd. (AEGP), an affiliate of American Energy Partners, LP (AELP) for the farm-out and development of the Company’s Northern Territory oil and gas tenements in Australia. The Definitive Agreements provide $60 million in Phase One funding and further provides access of up to $100 million of funding for Phase Two development. Two additional payments of $7.5 million each are payable in cash to Imperial, with the first payment payable on closing. The closing of the Definitive Agreements is subject to usual conditions for a transaction of this nature and size. The cut-off date for closing is within 120 days of the date of the Definitive Documents.
The keys terms of the Agreements as previously announced include:
Empire Energy Group Chairman and CEO, Bruce McLeod stated, “Preliminary exploration work undertaken by the Company across its 14.6 million acres of tenements has demonstrated that the McArthur Basin holds a significant proven hydrocarbon system. Now, with world leading experience, expertise and capital being bought to the project by AEGP, the likelihood of proving up and developing commercial hydrocarbon resources in the Basin has increased significantly.
Approvals for the closing of the Farm-out agreement from the necessary departments is being undertaken. In addition, planning and approval work relating to seismic and the location of drill pads on EP 184 and EP 187 has commenced, with on-ground work expected to proceed following the end of the wet season, being February to March 2016.
The establishment of low impact hydrocarbon production in these tenements will provide the opportunity to bring jobs and other significant long term benefits to the Traditional Owners and provide significant support for job creation and business opportunities throughout the Territory. The Company acknowledges the desire of the Traditional Owners to both maintain their rich culture but at the same time develop jobs and business opportunities. With the aid of Registered Training Organisations and the Department of Vocation, Education and Training, Imperial has developed and implemented an approved training program for local indigenous personnel.
With increasing demand for natural gas supply created from 5 LNG plants either existing or coming on stream in Northern and Eastern Australia over 2015 and 2016, forecasts are for strong, long term demand for the supply of natural gas. This means the development of the Company’s resources in the McArthur Basin, which from preliminary estimates has the potential to provide significant resources of natural gas and other petroleum products, is timely and will be closely monitored by end users.
For regional economics and especially in regard to the local Traditional Owners, the Northern Territory has seen tremendous job growth and community benefits from the energy resources industry. In November 2015 the construction of the North East Gas Interconnector pipeline was announced. This $580 million (AUD 800 million) natural gas pipeline project will link the Northern Territory to Mt Isa in Queensland bringing additional benefits to the region in which the Company is operating and provide a realistic export option for natural gas that may be discovered in Imperial’s Tenements.
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