Leed Transfers 25% Interest in Eugene Island to Byron
Leed Petroleum PLC announced that on July 18, 2008, the Company’s operating subsidiary, Leed Petroleum LLC, consistent with its obligations under the Byron Scouting Agreement, transferred 25% of its interest in its Eugene Island area assets to an operating subsidiary of Byron Energy Pty. Ltd. for US $16.4 million.
A subsidiary of the Company entered into the Scouting Agreement on December 8, 2005. Pursuant to this agreement, Byron earned the option to acquire up to 25% of the Company’s interest in the Eugene Island assets. Byron exercised this option, and the Company has now transferred ownership of 25% of its interest in the leases described below, together with the associated reserves, wells and facilities, to Byron’s operating subsidiary. The purchase consideration was calculated in accordance with the Scouting Agreement as 25% of the Company’s (i) original capital costs for the Eugene Island property; (ii) capital expenditures incurred in connection with the property; and (iii) operating costs incurred in connection with the property; less (iv) income received from the property.
The transfer of the 25% interest in the Eugene Island assets does not have any effect on the Company's reserves, which have historically been reported as if Byron had exercised its option. However, flow rates from the Company's A-6 well have previously been reported on a gross basis.
Howard Wilson, President and Chief Executive of Leed Petroleum PLC, commented, "Eugene Island has been a great acquisition for the Company. Our drilling results to date have created substantial value in Leed and we expect near term future drilling at Eugene Island to yield more value enhancing results. We look forward to continuing to work with Byron as a partner to unlock the potential of this field."