West Oil to Acquire Interest in Two Timor Sea Wells
West Oil it intends to participate in two further wells in the Timor Sea in January/February 2002 following an agreement with Canadian listed company Daytona Energy Corporation. West Oil has signed an agreement to acquire an option over the free carried interests in 5% of AC/P27 containing the potential 170 million barrel Sleeper Prospect and 10% of AC/P25 containing the potential 68 million barrel Sebring Prospect and acquire 18% of AC/P32.
A condition precedent to the agreement with Daytona is that Anadarko Petroleum Corporation, which is funding and drilling Sleeper and Sebring, waives its rights of first refusal over Daytona’s interests in AC/P25 and AC/P27. The interests, combined with its existing acreage in the Timor Sea, will give West Oil a dominant position in the Vulcan sub-Basin. Any discoveries in this area will help the potential development of West Oil’s existing discoveries at Puffin-5, Puffin-2 and Talbot.
West Oil announced last week it had successfully raised A$1.6 million through a fully subscribed entitlements issue. Due to demand from investors, West Oil will raise up to a further A$800,000 through a placement. $700,000 of this will be applied to funding the cost of the agreement with Daytona. If the Anadarko waiver is not granted then the funds will be used for general working capital and pursuing further opportunities West Oil has identified.
Managing Director Mr Charles Morgan said that with Sleeper and Sebring West Oil would now participate in four wells in the Timor Sea and Carnarvon Basin together with a potential well in AC/P26 over the next 6 to 8 months as part of its strategy to increase drilling activity. Exploration Director, Dr. Bevan Warris said that the Sleeper Prospect was a very large fault block to the southeast of West Oil's Talbot oilfield with the objective being karstified Permian limestones at around 1,350 meters. While the P50 estimate for the potential of Sleeper is 170 million barrels, the P10 estimate is 300 million barrels. The Sebring Prospect is a horst block similar and on trend with the Talbot oilfield with the objectives being the Triassic sandstones at around 1,350 meters. The Sebring Prospect has a P10 estimate of potential of 157 million barrels.
In consideration for Daytona entering into the agreement, West Oil will advance Daytona $150,000 to be converted into 1,000,000 shares in Daytona at C$0.12 (A$0.15) per share. Each share will have a free attaching two year warrant exercisable at C$0.15 in the first year and C$0.20 in the second year. The balance of the agreement is subject to Anadarko's waiver of its rights and provides for the following:
- West Oil will subscribe a further A$450,000 for 3,000,000 shares in Daytona at C$0.12 (A$0.15) per share. Each share will have a free attaching two year warrant exercisable at C$0.15 in the first year and C$0.20 in the second year. (This will result in West Oil holding approximately 12% of the ordinary shares in Daytona.)
- Subject to West Oil shareholders’ approval West Oil will issue Daytona with 12.5 million unrestricted shares and five million free trading options exercisable at 10 cents on or before June 30, 2003.
- West Oil will acquire 18% of AC/P32 from Daytona for A$100,000 and 2 million West Oil shares and 1 million West Oil options.
- On satisfaction of the above West Oil will have the following two options: (a) Within 90 days of the release of the rig from the Sebring well West Oil has the option to acquire 40% of Daytona's interest in AC/P25 for 25 million shares and 12.5 million options exercisable at 10 cents on or before June 30, 2004. (b) Within 90 days of the release of the rig from the Sleeper well West Oil has the option to acquire 40% of Daytona's interest in AC/P27 for 25 million shares and 12.5 million options exercisable at 10 cents on or before 30 June 2004.
Mr. Morgan said that the opportunity to participate in two huge wells adjacent to our existing interests in the Timor Sea is a perfect fit for West Oil's corporate strategy. "Subject to Anadarko waiving its rights, West Oil will have established a cross-shareholding with Daytona and looks forward to working together on further opportunities."