Falcon Oil & Gas has entered into an agreement with Origin Energy and Sasol to farm-out interest in exploration permits located in the Beetaloo Basin, Australia. Falcon holds 100% interest in over 7 million acres in Exploration Permits 98, 99, 76, and 117 covering the majority of the Beetaloo Basin.
Under the agreement, Origin and Sasol will,
· each earn 35% interest in the permits;
· carry Falcon in a nine well exploration and appraisal program, spread over five years;
· pay for the full cost of completing the first five wells estimated at A$64 million, and will fund any cost overruns;
· fund the full cost of the following two horizontally fracture stimulated wells, 90-day production tests and micro seismic with a capped expenditure of A$53 million, any cost overrun funded by each party in proportion to their working interest;
· bear the full cost of the final two horizontally fracture stimulated wells and 90 day production tests capped at A$48 million, any cost overrun funded by each party in proportion to their interest;
· pay Falcon A$20 million cash on completion of the agreements.
Falcon CEO Philip O' Quiley commented: "The Farm-Out…provides for a five year, nine well, technically comprehensive exploration work program in the Beetaloo. Together with A$20 million cash up front, the deal is worth up to approximately A$200 million to Falcon."
Post-transaction Beetaloo Permits ownership: Origin (35%, operator), Sasol (35%) and Falcon (30%).
In Jan-2013, Falcon Oil & Gas announced the completion of the acquisition of seismic data by Hess Australia on exploration permits 76, 98 and 117 held by Falcon's 73% subsidiary, Falcon Oil & Gas Australia in the Beetaloo Basin of the Northern Territory, Australia.
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