Oilex Secures Farm-Out of Key Timor Sea Block
Oilex has achieved a significant milestone in the restructuring of its international oil & gas portfolio after entering into an agreement to farm down 15% of its 25% interest in the highly prospective offshore Block 06-103 Production Sharing Contract (PSC) in the Joint Petroleum Development Area (JPDA) of the Timor Sea.
The farm-out agreement enables Oilex to achieve one of its key corporate objectives by reducing its financial exposure, while at the same time clearing the way for a landmark two-well drilling program to potentially commence later this year subject to rig availability, targeting a combined oil prospective resource of 285 million barrels (100% basis).
Oilex said today (Monday) that its wholly-owned subsidiary, Oilex (JPDA 06-103) Ltd, had entered into an agreement to farm down the 15% interest to Japan Energy E&P JPDA Pty Ltd (Japan Energy), a wholly-owned subsidiary of Japan Energy Corporation, for consideration including a refund of part of past costs and future funding for Oilex's remaining 10% share of the costs for two commitment wells up to an agreed cap. Oilex will remain as Operator of the PSC.
Oilex's Managing Director, Dr. Bruce McCarthy, said the agreement, which remains subject to a number of conditions (see below), was consistent with the Company's corporate strategy of restructuring its assets and operations to reduce costs while maintaining production revenues and assessing opportunities that may provide early production and exploration upside.
"Achieving this farm-out to reduce our financial exposure has been an important focus for the Company, and we are pleased to have concluded this agreement with Japan Energy," Dr. McCarthy commented.
"Block 06-103 in the JPDA represents a highly attractive offshore oil exploration opportunity with the potential to host significant oil resources," he continued. "The prospectivity of this area is highlighted by the discovery of the nearby Kitan oil field by ENI, for which a development plan has recently been submitted, as well as the Kuda Tasi and Jahal discoveries to the north of Kitan, the Laminaria/Corallina fields to the west, and the Bayu-Undan field to the south."
"We are delighted that Japan Energy also recognises JPDA 06-103 as a highly attractive offshore oil exploration opportunity. We look forward to acquiring the services of a new drilling rig, following the termination of the original rig contract noted in previous releases. We are seeking to commence the drilling of the first two prospects in the third or fourth quarter this year," he added.
The interpretation of the Maura 2,140 square kilometer 3D seismic over Block 06-103 was completed in the first half of 2009, identifying a portfolio of over 20 prospects and leads. Drilling locations have been selected for the first two commitment wells within the Block on prospects with mean prospective resources (on 100% basis) of 195 million barrels of oil (Loré) and 90 million barrels of oil (Lolotoe). A number of potential rig options are currently being pursued with the intention of securing a rig to commence drilling in Q3/Q4 2009.
The agreement with Japan Energy is conditional on:
- the Designated Authority approving an extension to Contract Year 3 of the PSC (currently ending in January 2010);
- the Designated Authority approving the transfer of the 15% interest to Japan Energy; and
- the Joint Venture parties giving their consent to the transfer of the 15% interest to Japan Energy and not exercising their rights of pre-emption under the JOA.
Upon satisfaction of these conditions, the participating interests in the Block 06-103 PSC will be:
Joint Venture Party Participating Interest
- Oilex (JPDA 06-103) Ltd (Operator) 10%
- Global Energy Inc 25%
- GSPC (JPDA) Ltd 25%
- Bharat PetroResources JPDA Limited 25%
- Japan Energy E&P JPDA Pty Ltd 15%
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