Proactive Investor's  Instablog

Baraka Energy and Resources (ASX: BKP) expects strong exploration activity to take place both on and around its Southern Georgina Basin acreage after the Foreign Investment Review Board approved Statoil's farm-in deal with partnerPetroFrontier (CVE: PFC).

The approval satisfies the last condition of the potentially US$210 million (A$205 million) farm-in that will ensure the drills will keep turning in the quest to unlock the riches of the Basin, which has been favourable compared to the Bakken Shale in North America.

"This is excellent news, now we can focus on the current exploration program and look forward to an exciting few months of results," Baraka managing director Colin Vost said.

Statoil deal and further exploration

Statoil will earn up to 65% interest in EP 103 and EP 104 (PetroFrontier 100%), EP 127 and EP 128 (Baraka 25% andPetroFrontier 75%) as well as exploration permit applications EPA 213 and EPA 252 (PetroFrontier 100%) under a three phase farm-in.

Throughout this farm-in period, Baraka will be part of all decisions made, in relation to expenditures, to its 25% interests in both EP 127 and EP 128. It will also pay for its share of costs in the permits and the 75% stake it holds in the 75 square kilometre area around the Elkedra-7 well in EP 128.

Success at the Macintyre-2H well that is due to be fracture stimulated and tested soon will ensure that EP 127 and EP 128 get their fair share or more of Statoil's proposed exploration work commitment.

Baraka has already made its first nominal contribution towards the completion cost for MacIntyre-2 and has enough funds to meet future contributions on its completion and the proposed seismic program that will be shot before the end of this year.

Looking more broadly, Statoil's investment, which is larger than previous foreign investments into Australian shale gas, is a sign of the increasing interest in Australian shale and unconventional oil and gas plays that can only be beneficial to players in this sector.

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