Under the terms of the agreement, Providence has agreed, subject to approval from the Irish Minister for Communications, Marine and Natural Resources and the Petroleum Affairs Division (PAD), with CMI to farm into 20% of the Celtic Sea interests in return for CMI paying 26.7% of the costs of the seismic programme in 2006. Thereafter, CMI will be responsible for 20% of all future licence, drilling and development costs. As a result of this farm-out, Providence will retain a stake of 75% in these Celtic Sea interests with its partner, Midmar Energy Limited, retaining a 5% stake.
The Celtic Sea interests (held under Licensing Options 03/8 and 03/1) contain the following discoveries: Blackrock, Ardmore, Helvick, Hook Head, and Dunmore (Block 50/6 & 7), as well as the Glandore exploration prospect. Under the terms of the agreement, CMI have been granted an option, exercisable until October 31, 2006, to farm-in to an additional 20% stake in these interests, on the same terms as above.
Commenting on the farm-out agreement reached with CMI, Tony O'Reilly jnr., Chief Executive of Providence Resources P.l.c. said:
"We are extremely pleased to have CMI and GlobalSantaFe involved with us on our Celtic Sea licences. A great deal of work has been carried out on these assets over the past 2 years and the involvement of CMI validates our view of the real development potential of a number of the assets in this area. After we complete our upcoming seismic programme, which is planned to commence in the very near future, the parties will then decide on the next steps for future drilling and development."
Chuck Hauf, President of Challenger Minerals Inc. added:
"CMI is excited to be working with Providence on the broad array of assets contained within these blocks. We are working in conjunction with Providence to assess multiple development opportunities at a time of robust commodity prices. The completion of the seismic survey is a necessary step in the final evaluation process before we can commence appraisal drilling".
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