Hibiscus Petroleum group, had on 4 July 2014, signed a series of binding agreements with its Australian partner, 3D Oil Limited (3D Oil), to increase its effective stake in both the VIC/L31 Production Licence, offshore Australia, which contains the West Seahorse discovered field, and the VIC/P57 Exploration Permit which is believed to contain several exploration opportunities.
Hibiscus Petroleum through its subsidiary, Carnarvon Hibiscus Pty Ltd currently holds a 50.1% stake in both licences located in the Gippsland Basin, an oil-prolific offshore basin in Australia.
The arrangements as envisaged through the agreements will provide the Hibiscus Petroleum group with:
- An increase in Carnarvon Hibiscus’ interest in the VIC/L31 Production Licence (West Seahorse discovery) from 50.1% to 56.17%, for a sum of USD1.945 million under a debt conversion exercise.
- An exclusive option to further increase its stake in the VIC/L31 Production Licence (VIC/L31 Option) from 56.17% to 100% for USD14.05 million, based on a fair market value of 3DO’s 49.9% stake in the West Seahorse field determined by Deloitte Touche Tohmatsu.
- An increase in Carnarvon Hibiscus’ interest in the VIC/P57 Exploration Permit from 50.1% to 55.1%.
- A purchase of 3D Oil’s 49.9% share of the Britannia rig which is already 50.1% owned by Carnarvon Hibiscus, thus providing Carnarvon Hibiscus with 100% ownership of the Britannia rig.
The total consideration for the Britannia rig and the 5% interest in VIC/P57 Exploration Permit is USD7.5 million.
An exclusive option for Hibiscus Petroleum’s joint venture, HiRex Petroleum Sdn Bhd (HIREX) to obtain a 20% equity in VIC/P57 Exploration Permit (VIC/P57 Option) from 3D Oil in exchange for
use of the Rex Virtual Drilling technology.
The option of full ownership of the West Seahorse production licence gives Hibiscus Petroleum more latitude to advance development plans of West Seahorse which contains 6.5 million barrels of proven oil reserves and contingent resources of 1.5 million barrels of oil, as certified by independent expert Gaffney, Cline & Associates. Having full ownership of the Britannia rig will also allow Hibiscus Petroleum to solely decide the most beneficial location to deploy this facility.
With respect to the VIC/P57 Exploration Permit, HIREX’s entry would allow the joint venture parties to pursue low risk, high impact exploration in VIC/P57 Exploration Permit using Rex Virtual Drilling technology provided by HIREX.These agreements are in relation to Hibiscus Petroleum’s announcement on 12 May 2014 regarding the signing of a Heads of Agreement with 3D Oil, a preliminary move towards allowing both parties
to exploit the full potential of the VIC/P57 Exploration Permit and VIC/L31 Production Licence within their respective financial capacities. These binding agreements are subject to approvals from 3D Oil’s shareholders, the Australian Foreign Investment Review Board and NOPTA (National Offshore Petroleum Titles Administrator).