Gippsland Basin focused 3D Oil (ASX: TDO) has completed the A$27 million farm-out of VIC/P57, which hosts the West Seahorse oil field, to Malaysia’s Hibiscus Petroleum Berhad.
“This is a very significant milestone for 3D Oil. This transaction will underpin the development of the West Seahorse Oil Field while securing complementary expertise for the effective exploitation of the field,” 3D Oilmanaging director Noel Newell said.
“We are pleased to welcome Hibiscus as operator of West Seahorse and the exploration of VIC/P57. We have already established a strong working relationship through our joint project team and we look forward to delivering first oil production for both companies and to drilling further exciting exploration targets.”
Under the agreement, Hibiscus will take up a 50.1% interest in VIC/P57 and fund the first $27 million of joint venture expenditure.
Hibiscus has deposited $20.25 million into joint venture accounts with the Commonwealth Bank of Australia comprising $13.5 million into the Joint Account and $6.75 million into an escrow account.
A further tranche of $6.75 million will be deposited into the escrow account upon the exhaustion of the other monies.
Expenditure in excess of the $27 million farm-in funding will be contributed in accordance with joint venture interests.
Hibiscus will preferentially receive 74.9% of petroleum produced from the permit until the sale revenue equals the amount funded by Hibiscus. Thereafter, each party will receive cash flows equivalent to their participating interest in the producing asset.
As part of the transaction with Hibiscus, 3D Oil has also issued 30,963,000 fully paid ordinary shares to another wholly-owned subsidiary of Hibiscus Petroleum, Oceania Hibiscus Sdn Bhd, for which subscription fees of $2.04 million were received in September 2012.
First discovered in 1981, West Seahorse holds best estimate Contingent Resources of 9.2 million barrels of recoverable oil about 14 kilometres off the Victoria coast.
3D Oil is investigating the potential of the Gurnard Formation that lies directly above the main reservoir to provide further upside to the Resource figures.
West Seahorse is close to producing oil and gas fields including ExxonMobil’s (NYSE: XOM) A$4.4 billion Kipper-Tuna-Turrum project where gas production is targeted for 2016.
Besides developing West Seahorse, the joint venture will also target the drilling of the Sea Lion prospect and will continue exploration work in the permit including on the Felix prospect.
Sea Lion has estimated Prospective Resources for the three main target levels of 11 million barrels of oil.
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