Australian Independents to Focus on Africa in New Alliance

Five Australian oil and gas companies have formed an Alliance to collectively acquire hydrocarbon projects together focusing initially on Africa. The companies have signed a Memorandum of Understanding (MOU) that will allow them to pool their resources in seeking, evaluating and acquiring high value projects.

The alliance members who are signatories to the MOU are:

--Adelphi Energy Limited (ASX: ADI);
--Arc Energy Limited (ASX: ARQ);
--Advanced Well Technologies Pty. Ltd.(AWT);
--Baraka Petroleum Limited (ASX: BKP); and
--Beach Petroleum Limited (ASX: BPT).

Baraka General Manager Dr Mark Fenton said he believed that the creation of the Alliance would allow member companies to jointly acquire projects of a magnitude that would otherwise have not been possible acting alone.

"This alliance has been formed so as to allow the group to punch well above the sum of the individual companies' collective weight," Dr Fenton said.

"For smaller companies, such as ours, this represents a unique opportunity to significantly increase the size of deals we can participate in, a reduction in our overall risk levels and a pooling of complementary resources to ensure the most efficient use of each company's financial and human resources.

A successful exploration strategy in Africa in particular requires a high level of dedicated human resources, a well established network of local contacts and, to some degree, deep pockets and patience given the cost profile and relatively long gestation periods for new oil and gas projects. In itself, this provides challenges for small exploration companies which can best be tackled as part of a larger group but still offering exceptional leverage to our respective shareholders on the basis of the type of opportunities that will be targeted by the Alliance."

"This is a win for each individual company and its shareholders."

For each new project considered, parties that elect to participate would enter into a confidentiality and non-compete agreement as well as a joint evaluation agreement. A flexible participation arrangement has been agreed whereby participating parties share costs throughout the various stages of evaluation and negotiation and can elect to discontinue at agreed points.

A variety of projects including production, rejuvenation, development, near field exploration and frontier exploration are likely to be considered by the Alliance members.

"Importantly, this MOU is unique in that no company is bound to take part in any or all of the opportunities that are brought to the Alliance. This is not a joint venture agreement or formal partnership. However, it is wise for us to take a collective view on the evaluation and potential development of certain opportunities," Dr Fenton said.

The Alliance members plan to immediately start evaluating projects initially from Africa but also from elsewhere in the world.