Nautical will retain a 50% interest as operator and Celtic Oil Limited will retain a 40% interest.
Under the terms of the farmout agreement Silverstone will pay 20% of the costs of drilling the imminent vertical exploration well on the Mermaid prospect, scheduled to be spudded in late October 2007. Mermaid is a large prospect analogous to the nearby Mariner multi well discovery and has been delineated on reprocessed 3D. This low risk prospect has best estimate prospective resources of 129mmbo (gross) (verified by RPS Energy) and will add significantly to Nautical's contingent resources if successful.
Commenting on the transaction Steve Jenkins Chief Executive of Nautical said
"We welcome Silverstone in its participation in the drilling of the substantial Mermaid prospect. Silverstone has interests in adjacent heavy oil blocks and innovative ideas on heavy oil development. This farm-in further endorses our strategy of mitigating risk on exploration wells, whilst retaining a significant equity interest."
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