Under the agreements SK Corp shall carry part of Nautical's exploration expenditures on a 2 for 1 basis for the proposed work program above. The wells are to be drilled between 2007-08 as part of Nautical's commitment to its licensing terms with the Department of Trade and Industry.
The multi-block agreements between Nautical and SK Corp. require both companies to fund and participate in active exploration and appraisal which will extend the overall work program and is aimed at accelerating the production phase. The multi-block scope will also benefit both parties by spreading risk. The agreements are contingent on certain formal consents and approvals being confirmed by the DTI and the Government of the Republic of Korea, all of which are expected to be finalized within 3 months.
The farm out invitation process followed comprehensive technical preparation by Nautical and was conducted over the past two months. The program has seen more than 10 companies assess the potential of the Nautical's assets on offer. Interested parties reflect the full range of industry participants - from specialized independent to major exploration and production companies. For Nautical, this represents independent confirmation of growing industry interest in heavy oil opportunity, effectively endorsing the business focus and strategy of the company.
Commenting on the farm out process, Steve Jenkins Chief Executive of Nautical said:
This transaction supports an acceleration and expansion of our immediate work program. Our focus in the coming two years shifts to the development and management of an extensive drilling program across our asset portfolio. A key objective is to achieve first oil within our planned timetable of late 2007 or first quarter 2008."
The farm out agreements extend across four blocks as detailed below: License SK Corp. farm-in equity Nautical equity interest Work Program interest % ongoing % 9/2b 30% 45% 3D seismic and 2 wells 3/27a 30% 45% 3D seismic and 1 well 9/11c 40% 60% 1 well 8/25a 40% 60% 1 well
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