MEO Australia’s subsidiaries have executed an Option Agreement with an international exploration company (the Farminee) providing the Farminee with an option to farm-in to any of the WA-488-P, AC/P50 and AC/P51 permits, off Australia.
With regards to WA-488-P (which contains the giant Beehive prospect) the Option Agreement provides an option for the Farminee to acquire a 30% interest in the permit and be obligated to fund 30% of the forward expenditure in the permit.
In the absence of MEO having a funding alternative, provisions are included for the Farminee to acquire an additional 10% equity in return for procuring full funding of a 3D seismic survey over the Beehive prospect (if required) and an additional 40% equity for procuring full funding of the proposed Beehive-1 well. If these provisions are utilised, MEO will have a fully carry through a Beehive-1 well for its residual 20% participating interest.
Alternatively, in the absence of the exercise of the additional equity options, the Farminee also has the right to withdraw from the permit if MEO or its relevant wholly owned subsidiary has not entered into arrangements to fund its future permit work program prior to 4 months before the end of Permit Year 3.
Farminee has completed their technical assessment of WA-488- P and has immediately exercised their initial option to farm-in for 30% interest, which is subject to final board approvals. Final farm-in documentation is scheduled to be completed within approximately 2 months.
With regards to AC/P51 (which contains the Ramble On prospect) or AC/P50, the Option Agreement provides an option to the Farminee to conditionally acquire a 30% interest in the applicable permit and be obligated to fund 30% of the forward expenditure in the permit.
The conditions to the potential farm-in provide that if there is an unfavorable outcome from the permit renewal process to be started later in 1Q 2015, the Farminee will be entitled to withdraw from either permit. The Farminee is currently undertaking their technical assessment of AC/P50 and AC/P51.
MEO’s MD & CEO, Peter Stickland, commented on the announcement:
“MEO’s strategy is to farm down its Northern Australia permits in order to participate in the drilling of quality prospects at minimal cost to MEO. While the agreement to farm-out 30% of WA-488-P is conditional, it is an important first step. If the farm-out is completed and the included provisions are utilized, MEO will have achieved its objective of a fully carry through a Beehive-1 well for its residual 20% participating interest.
“Separately MEO continues to engage with a number of other parties who are evaluating WA-488-P and additional parties can be accommodated in the Permit by the current agreement. The Option Agreement for AC/P50 and AC/P51 is a positive step in the Farminee’s evaluation process and we look forward to working with the Farminee on their assessment of MEO’s identified prospects in each permit.”