Bligh Farms Out Stake in Beibu Gulf
Bligh has agreed to farmout 10% of its equity in Block 22/12 in the Beibu Gulf, Offshore China, to a subsidiary of Roc Oil Company Limited in return for a substantial carry through Bligh's share of the future work program in the Block. The transaction, which will result in Bligh retaining a 30% working interest in Block 22/12, is subject to the approval of the relevant government authorities in China and finalization of farmout documentation.
Bligh was awarded a 100% interest in Block 22/12 in December 1999. In February this year the Company farmed out 60% of its interest to a group comprised of subsidiaries of ROC, Petsec Energy Limited and First Australian Resources Limited to join in the drilling of the Wei 6-12-1 exploration well.
Since then the exploration well has been drilled; an oil discovery has been made; Bligh has transferred operatorship to ROC after receiving approval from the authorities in China; a 421 sq km 3D seismic survey has commenced and an engineering and reservoir review has been initiated in order to better understand the commercial potential of the five undeveloped discoveries which exist within the Block.
In consideration for acquiring a 10% interest from Bligh, ROC will carry Bligh's current 40% interest through the approved US$3.5 million 2002-2003 work program, until a total of US$933,000 has been spent in relation to that interest. This fixed cost, partial carry, represents 26.67% of the currently approved 2002-2003 work program, most of which relates to 3D seismic acquisition, which is currently 60% complete.
ROC will also provide Bligh with an additional partial work program carry through the next well to be drilled in the permit, up to a maximum fixed net expenditure by ROC on Bligh's behalf of US$100,000. This well is expected to be drilled between March and December 2003.
If, after receiving appropriate formal approvals from the Chinese authorities, ROC decides to proceed either into the Third Exploration Phase (one year from 1 April 2004) or enter into a Development Phase approved by the China National Offshore Operating Company, it will provide Bligh with a further fixed work program carry up to a maximum of US$233,000.
ROC has announced a parallel transaction with FAR, which will result in a Joint Venture composed of Bligh with 30.00%; ROC as operator with 40.00%; Petsec with 25.00% and FAR with the remaining 5.00%.