Mosman Oil and Gas Ltd (AIM:MSMN) has agreed a farm-in deal for its EP 145 project in Australia’s Northern Territory with Greenvale Gold.
Greenvale can earn up to a 75% stake in the project through the payment of A$160,000 cash, paying for A$2 million of seismic as part of a work programme and a well with costs capped at A$5.5 million.
Mosman added it had identified a drilling target at 1,500 metres (m) and estimated the cost of drilling that well to be in the order of A$5 million.
Costs above the A$5.5 million cap will be shared 75% by Greenvale and 25% by Mosman.
Regulatory approvals are expected by 30 January 2024, after which the agreement can be terminated by either party if they have not been received.
Mosman added it considers the farm-in the best outcome as it eliminates the need to raise additional capital.
A spin-out and initial public offering (IPO) as had been previously suggested would have involved significant costs, Mosman added.
Andy Carroll, chief executive: added: "We are pleased to have reached agreement with Greenvale who we see as a strong Joint Venture partner to work with in Australia.
“This agreement delivers on funding exploration and is validation of the helium, hydrogen and hydrocarbon potential of EP 145."
Shares rose 18% on the announcement.