The farm-in sees Ausam join Mosaic (operator) and Santos in their PL 119 license and ATP 471P Bainbilla Block permit in Australia.
Ausam can earn up to a 35% interest from joint venture partners Mosaic and Santos by spending up to A$6.5 million in two consecutive stages involving seismic acquisition and the drilling and testing, and if successful, completing and connection for production of up to 4 wells.
The parties agree that best efforts will be made to drill at least the first three wells, including an exploration commitment well in the Bainbilla Block, before 31 December 2006. To help meet this timetable, Mosaic and Ausam are members of a group of operating companies negotiating to mobilize a rig from Western Australia to the Surat-Bowen Basin for a multi-well drilling program to commence as early as July 2006.
"This significant farmout program for the Surat-Bowen Basin is part of Mosaic's strategy to accelerate the exploration and exploitation of its assets via farm-out, while actively pursuing new ventures for medium to long term diversified growth," commented Mosaic Chairman, Dr. Don Stammer.
"This transaction follows the PL 15 farm-in option granted to Bow Energy, announced in March 2006. Mosaic is also actively engaged in farming out the Onerry A Block of ATP 471P and ATP 709P as a continuation of this strategy."
Dr Stammer said that these joint venture deals deliver Mosaic prudent risk management and still retain significant equity exposure in these blocks to benefit from good oil and gas upside potential.
"These joint ventures will accelerate our exploration and exploitation activities and, if successful, will add production and incremental cash flow. They will also allow us to direct Mosaic's cash to new venture acquisition and oil development activities", added Dr. Stammer.
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