Under the terms of the Farmout Agreement, JSXT will assign to Interra 50% of the participating interests in the 3 onshore exploration blocks. As consideration for the transaction, Interra will fund JSXT's 50% share of the exploration program expenditure for first 3 years amounting to US$2.1 million. The total approved exploration program expenditure for the initial 3-year period is approximately US$4.2 million and thereafter, all expenditure will be shared proportionately between the owners.
Luke Targett, CEO of Interra said, "This is Interra's first venture into Thailand and the acquisition represents a significant addition to Interra's oil and gas portfolio in Southeast Asia. It is an excellent opportunity for Interra which will enable us to apply our significant inhouse skills to add value to the project. We are greatly encouraged by the potential of the blocks and we look forward to building on the excellent relationship we have already established with JSXT."
The Petroleum Blocks, which are almost adjacent to one another, cover a total area of 9,911 square kilometers and are located in a highly prospective area of western Thailand. Block L17/48 abuts the Myanmar border and encompasses the Mae Sot Basin. The Mae Sot Basin has many characteristics required for oil generation and entrapment – a proven high quality source rock, favorable thermal and burial history, a thick sedimentary sequence, reservoir rocks, and structural features that form potential traps. A significant amount of Thailand's total oil and gas production is produced from similar reservoirs, conditions and timing as indicated in the Mae Sot Basin. In addition, the Petroleum Blocks are located in close proximity to Thailand's Sirikit Field, which is the most productive onshore, field and is currently producing approximately 20,000 barrels of oil per day.
Frank Hollinger, Chief Technical Officer of Interra said, "The success of the Sirikit Field to the east and the similarities seen in the Mae Sot Basin make it an extremely exciting exploration play. If we are successful in the exploration program, every effort will be made to expedite the development of any discoveries and subsequently add significantly to Interra's reserves. Based on our initial review of the available geological and seismic data, we have already identified several quality leads to begin working on."
The Petroleum Blocks will be jointly operated by JSXT and Interra through a joint operating company ("JOC"). The JOC will embark on a carefully planned, phased approach to the exploration program. Both JSXT and Interra will dedicate highly trained and technically competent personnel to this project. Interra will fund the acquisition and its share of exploration program commitment from existing funds on hand. The transaction is subject to the Thai Ministry of Energy approval.
The Company said that investors should exercise due care and caution when trading Interra shares. It is not certain that any leads or prospects which may be identified in the Petroleum Blocks in the future will ultimately prove to contain or yield commercially recoverable hydrocarbons.
Interra Resources Limited is a Singapore-listed company engaged in the business of upstream petroleum exploration and production whose activities include petroleum production, field development and low-risk exploration through strategic alliances and partnerships.
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