PetroNeft has entered into a binding agreement with Oil India Limited (NYSEARCA:OIL) to farm-out interest in License 61 located in Tomsk Oblast, Russia.
· Located on the east side of the Ob River in Tomsk Oblast
· Covers 4,991 sq km including seven oil fields and over 25 identified prospects and leads
· Estimated 2P reserves of 117.05 MMbbl
Under the terms of the agreement, OIL will acquire a 50% interest in the license by making a total investment of up to $85 million consisting of,
· $35 million upfront cash payment
· $45 million of exploration and development expenditure on the license
· $5 million performance bonus, contingent upon average production from the Sibkrayevskoye field reaching 7.5 Mbbl/d within the next 5 years
PetroNeft will remain as the operator of the license. Following completion of the farm-out, PetroNeft will begin a six well drilling campaign.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.