Origin gets in on MEO action
PERTH (miningweekly.com) – ASX-listed Origin Energy has signed a farm-in agreement with fellow-listed explorer MEO Australia over a gas exploration licence offshore Western Australia.
Under the terms of the farm-in, Origin would acquire a 50% stake in the permit by reimbursing 80% of the costs already expended by MEO subsidiary Drysdale Offshore Exploration, and by funding 80% of the costs of drilling an exploration well on the Breakwater prospect.
The untested cost of the exploration well has been capped at A$35-million, and cost exceeding this cap, including production testing, would be funded by the parties according to their participating interests.
MEO told shareholders that the reimbursement-cost payments would be made in two tranches of A$2.8-million each, with the first paid upon the receipt of regulatory approval of the permit transfer, and the second by July 2014.
“MEO considers the Breakwater prospect has the potential to host significant gas and possibly liquids resources which, in the event of exploration success, would readily feed into a growing regional gas market,” said CEO and MD Jürgen Hendrich.
“The project has evolved in a little over two years from acreage award in June 2011, acquisition of three-dimensional seismic in early 2012, to the execution of a binding farm-in agreement in July 2013.”
Hendrich said that this demonstrated MEO’s business model of securing prospective acreage, adding value by undertaking technical work, and attracting a substantial partner to recover invested capital and to fund the majority of drilling costs, while MEO retained a material interest.
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