Gippsland Basin focused 3D Oil's (ASX: TDO) Malaysian partner Hibiscus Petroleum (KLSE: 5199) have secured approval from the Foreign Investment Review Board for its investment in the offshore West Seahorse oil field in VIC/P57.
Hibiscus' farm-in for a 50.1% operating stake in VIC/P57 is expected to be completed in December 2012.
3D Oil has already received the A$2 million from Hibiscus for the 30.96 million 3D Oil shares that it had subscribed for. Once the shares are issued in December, Hibiscus will have a 13% interest in 3D Oil.
The deal will fast track development of the West Seahorse field and is anticipated that first oil production will occur in mid-2014.
With development of West Seahorse expected shortly, 3D Oil is planning to re-focus its exploration efforts and will continue to assess new opportunities for growth, both now in the context of development operations and imminent oil production from VIC/P57.
West Seahorse development
Hibiscus plans to develop West Seahorse through the possible use of a mobile offshore production unit and a floating storage and offloading vessel moored to a CALM buoy.
This will allow for quick development and lower upfront capital costs as the production unit is a converted jack up drilling rig that can be leased and installed within 12 months from contract award.
It can also be relocated, making it very suitable for development of the West Seahorse field which will have a short field life.
The joint venture will also drill two appraisal wells, which subject to securing a rig, are expected to spud next year.
The joint venture will also target the drilling of an exploration well in the Sea Lion prospect.
Sea Lion has prospective resources of 20.7 million barrels of oil in the same reservoir units as at West Seahorse and upside potential in excess of 32 million barrels.
Any oil discovery will be easily producible, either through an independent development or as a joint development with West Seahorse.
Kuala Lumpur stock exchange-listed Hibiscus holds a 35% stake in Lime Petroleum, which holds four concessions in the Middle East, as well as agreements with North Energy to participate in four concessions located at the Norwegian Continental Shelf.
The company has a strong management team with managing director Kenneth Pereira having 22 years of experience in the oil and gas industry with stints as the managing director of Mumbai listed Interlink Petroleum and chief operating officer of SapuraCrest Petroleum Berhad.
Shares in Hibiscus have increased over the last year to Malaysian Ringgit 1.87 from about MYR0.50. The company held cash of MYR218.5 million (A$66.8 million) as of 31 March 2012.
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