Photo by: Bloombeg
PERTH (miningweekly.com) – Quadrant Energy Australia will pay ASX-listed Buru Energy and its joint venture (JV) partner Mitsubishi Corporation A$10-million after withdrawing from the Coastal titles farm-in agreement.
In 2013, Quadrant, previously known as Apache Energy, inked a JV agreement with Buru and Mitsubishi to earn a 50% interest in four exploration permits by funding a A$25-million exploration programme.
The company was also granted the option to earn a stake in five other exploration permits making up the Coastal permits.
Buru noted on Wednesday that following the farm-in agreement, the JV drilled the Commodore 1 and Olympic 1 conventional oil exploration wells and, although some hydrocarbon shoes were encountered, the wells were noncommercial and were plugged and abandoned.
The cost of these wells, and other activities on the permits, was substantially less than the A$25-million farm-in commitment promised by Quadrant.
As a result, the JV parties have now agreed that Quadrant would withdraw from the permits, but would fulfil its remaining obligations by paying A$10-million to the remaining JV partners, adjusted for final JV expenditure during July.
After the adjustments, Buru would receive some A$4.9-million in cash.
Buru executive chairperson Eric Streitberg said this was an "appropriate" solution to the Coastal titles farm-in agreement.
“The original deal was struck in a very different oil price and operating environment and we are very pleased that the parties have come to a mutually agreeable commercial resolution.
“The payment from Quadrant is a welcome cash injection for Buru, which will be used to fund further exploration or appraisal and development programmes on our core areas.”