LONDON (Alliance News) - Frontera Resources Corp Thursday said it has signed an agreement with Varang Exploration Ltd to sell up to a 50% interest in its Taribani Field Complex in Georgia for up to USD36 million in return for a drilling programme at the site.
The oil and gas exploration and production company said its subsidiary Frontera Resources Georgia Corp penned the so-called farmout deal, under which it will receive the money for the costs associated with drilling seven wells over three phases.
The company said that during Phase 1, Varang will hold a 40% working interest in return for funding all of the costs on three wells, estimated at USD17 million, over 18 months.
Frontera said its Phase 1 process is designed to continue exploitation of the Taribani Field's main reservoir objectives, as well as other associated horizons situated within a potentially prospective 1,000 metres geologic column situated between 2,000 metres and 3,000 metres in depth.
The company said that during Phase II, Varang has the option to hold an additional 10% in return for funding all of the costs connected with the drilling of a new well, estimated to be roughly USD7 million.
As part of the deal, once the two phases are complete, Varang will hold a 50% interest in the greater Taribani Field Complex in return for funding all of the costs associated with three further wells, estimated to be roughly USD12 million.
Frontera said the deal is subject to the approval of the Georgian government.
The Taribani Field complex is an area that encompasses approximately 1,400 square kilometres, where internal preliminary analysis suggests that there could be as much as 18 billion barrels of oil in place.
Frontera Resources shares were up 12.1% to 0.695 pence, putting it in the top three AIM All-Share risers in early trading Thursday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
