Australia’s Tap Oil Limited has executed an agreement with WHL Energy Limited for an option to acquire an initial 10% interest in exploration permit Vic/P67 in the offshore Otway Basin. The Vic/P67 permit contains the undeveloped La Bella gas discovery and multiple near-field exploration targets. WHL announced a farmout of a 60% interest in Vic/P67 to AWE Limited on 4 September 2013.
Under the terms of the agreement, Tap has an option to acquire an initial 10% interest in Vic/P67 by paying up to a maximum of US$2.95 million of the Year Two commitment seismic costs in the permit.
The payment will be deferred until 31 March 2015. The 811km2 3D seismic survey has full environmental approvals and is expected to commence in the fourth quarter of 2013.
Tap will not be required to exercise the seismic option until 10 days after incoming JV partner, AWE, confirms whether it wishes to elect to enter the drilling phase.
In the event the seismic option is exercised, Tap has an option to acquire an additional 5% interest in Vic/P67 (i.e. increasing Tap’s net equity to 15% in Vic/P67) by paying a total of 20% of the cost of the first commitment well (gross well cost is capped at US$35 million (US$7 million Tap share)).
Tap’s Managing Director/CEO, Troy Hayden said: “This transaction provides Tap with an opportunity to participate in the East Coast gas market.
The optionality of the transaction and the expected timing of expenditures fits well with Tap’s cash flows following the expected startup of the Manora Oil Development in mid 2014.”
Press Release, September 18, 2013