The third party will earn a 30% beneficial interest by funding VEX's share of the drilling and testing of a well (up to a maximum of US$17 million (net)). Vermilion Rep SAS ("VREP"), a French subsidiary of Vermilion Energy Trust ("Vermilion"), will operate the permit and hold the remaining 47.5% interest in the permit. Total estimated drilling and testing costs range between US$25 and US$30 million (gross). If total costs exceed US$34 million (gross), the excess cost will be shared by all the parties, in accordance with their beneficial interests.
The transaction is subject to the parties entering into definitive farm-out and joint operating agreements and is subject to all conditions precedent, including the receipt of all necessary regulatory approvals.
Vermilion announced today that it has entered into an agreement to secure a rig to drill the first well on an Aquitaine Maritime prospect in the third quarter of 2007. The drilling of the well is subject to finalizing negotiations with partners and is dependent on receipt of all regulatory approvals and permits from the French authorities.
Interpreted results from 2D and 3D seismic on the offshore Aquitaine Maritime exploration permit yielded six structural prospects and leads with significant potential. These structures range in size from 8 to 30 square kilometers with vertical closure ranging from 200 to 500 meters. The initial targeted structure, the Orca prospect, measures approximately 20 kilometers long, 2 kilometers wide and 500 meters thick.
"Farming out a part of our interest in the Aquitaine Maritime permit to fund our share of an exploration well and securing a drilling rig for 2007 is excellent news," said Jim McFarland, President and CEO. "This allows the Company to accelerate the exploration of a high impact opportunity with limited capital exposure."
Verenex is a Canada-based, international oil and gas exploration and production company with a world-class exploration portfolio in Libya and the Bay of Biscay offshore France.
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