Under the Heads of Agreement Mosaic Oil has granted Bow Energy an option to earn a 50% interest in PL 15 (excluding the Boxleigh gas field and the Boxleigh North-1 gas well) by funding the drilling of a well within 12 months of exercising the option.
Bow has until August 31, 2006 to exercise the option to earn a 50% interest in PL 15 (excluding Boxleigh Field and Boxleigh North-1 well) by funding 100% of a well. Cost of the well includes casing and suspension of the well if successful. The well must be drilled within 12 months of the exercise date. Any additional exploration and planning work in the permit up to the completion of the drilling will be funded by Bow.
Mosaic will remain the Operator of PL 15 after the completion of the farm-in, but Bow will have the right to operate drilling of the farm-in well at its election.
This farm-in is the first stage of Mosaic's previously announced farm-out strategy, which will lead to accelerated exploration and appraisal activities in a high oil price environment.
Discussions relating to a farm-in into Mosaic's producing Downlands fields in PL 119, and the Bainbilla Block of ATP 471P, are well advanced.
Mosaic's CEO, Mr. Lan Nguyen said: "The main targets in PL 15 area are the mid-Triassic Showgrounds and Moolayember Formation reservoirs and Bow has experience and recent success in working these reservoirs in the area near PL 15, hence Mosaic sees this as a win-win situation for both companies."
Mr. Nguyen added that this farm-in will accelerate exploration and appraisal of the area and will complement Mosaic's other Surat-Bowen activities. Mosaic is also actively assessing new acreage opportunities as part of its announced business plan for diversification and growth.
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