A wholly owned subsidiary of the Company, Pan Pacific Petroleum (JPDA 06-103) Pty Ltd ("PPPJ") has agreed to acquire a 15% Participating Interest in the JPDA 06-103 Production Sharing Contract (JPDA 06-103) by executing simultaneous 5% farm-out agreements with each of:
The terms of the agreements include a partial refund of the farm-out parties' past costs and a contribution on their behalf to the costs of the first two exploration wells planned to be drilled in JPDA 06-103.
Other participants in JPDA06-103 are Japan Energy E&P JPDA Pty Ltd, a subsidiary of Japan Energy Corporation and Oilex (JPDA 06-103) Ltd (Operator).
Upon completion of PPPJ’s farm-in obligations, the participating interests will be:
PPPJ's farm-in is subject to certain conditions including the waiver of pre-emptive rights by the Joint Venture partners, and the approval of the assignment by the Autoridade Nacional do Petróleo of Timor Leste, the Designated Authority.
JPDA 06-103 is located within the northern Bonaparte Basin, offshore northwest Australia, within the joint petroleum development area (the "JPDA") issued pursuant to the Timor Sea Treaty between Timor-Leste and Australia. The contract area, which extends over 3700km2 in area is adjacent to several existing oil fields such as Laminaria and Corallina and the recent Kitan discovery (see location map below), and prospects similar to this successful oil play are believed to exist in JPDA 06-103. The Operator reports that a portfolio of prospects comprising over 20 structural closures has been identified in the block. Drilling locations have been selected for the first two wells on prospects which the Operator recently reported as having recoverable mean prospective resources (on 100% basis) of 195 million barrels of oil (Loré) and 90 million barrels of oil (Lolotoe).
The semisubmersible drilling rig "Songa Mercur" has been contracted for a two well drilling campaign in the JPDA 06-103 contract area, with the option of one additional well, and is scheduled to mobilize for the Joint Venture, subject to meeting certain contractual requirements, immediately after release from its current contract with Woodside Energy Ltd, anticipated to be in November 2009.
PPP is delighted to join the JPDA 06-103 Joint Venture, and to participate in the drilling of two attractive prospects in the short term. This is a very attractive area and the large number of prospects in the block indicates the potential for material upside in the event of success.
This farm-in is a futher step in the execution of PPP's stated growth strategy which includes participation in selected exploration in proven basins, in the Southeast Asia region.
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