Key Petroleum has joined the hunt for domestic oil in Australia by reaching agreement in principle with CalEnergy Resources (Australia) to participate in its two-well, onshore drilling campaign in permit EP 437 in the North Perth Basin.
Subject to agreeing and executing formal agreements, Key will earn a 45% interest in the EP437 permit by agreeing to pay 60% of drilling costs with those drilling costs being capped at $2.25 million, thereafter Key's contribution will decrease to 45%. Drilling is expected to commence end Q3/Q4.
The North Perth Basin is a known hydrocarbon province and has seen considerable success for a number of companies. Key's decision to participate in the drilling of these two onshore wells is based on the belief that it has the potential to provide low cost oil production.
Key Petroleum's Managing Director /CEO, Ken Russell, said, "Key has been internationally focused, however, when an opportunity presents itself to enter into what we believe to be prospective prospects in our own backyard, we'd be foolish to not participate."
"Oil demand and prices are likely to continue to rise and the opportunities to access low-cost oil deposits are decreasing. This drilling program, in a forgotten corner of the North Perth Basin, aims to access shallow pools using a small land drilling rig, thereby reducing the overall cost," Mr. Russell said.
Mr. Russell continued, "CalEnergy is part of a substantial energy group based in the USA that Key believes has put together a program that should see both companies enjoying success in this area. We look forward to working together with CalEnergy in the future."
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