LONDON (Alliance News) - Falcon Oil & Gas Limited said Friday that its 98% subsidiary, Falcon Oil & Gas Australia Limited has signed "transformational" agreements for its exploration permits in the Beetaloo Basin in Australia.
Falcon said that its Australian firm has executed Definitive Agreements including a Farm-Out Agreement and Joint Operating Agreements with Origin Energy Resources Limited, a subsidiary of Origin Energy Limited and Sasol Petroleum Australia Limited, a subsidiary of Sasol Limited, to each farm into 35% of Falcon's exploration permits in the Beetaloo Basin, Australia.
The Agreements are subject to conditions inter alia Government, statutory authority consents and relevant Stock Exchange approvals, said the company.
Under the terms of the deal, the partnered 'farminees' will carry Falcon in a nine well exploration and appraisal programme over five years. The programme will include three vertical exploration/stratigraphic wells and core studies; one hydraulic fracture stimulated vertical exploration well and core study; one hydraulic fracture stimulated horizontal exploration well, commercial study and 3C resource assessment; and four hydraulic fracture stimulated horizontal exploration/appraisal wells, micro-seismic and 90 day production tests.
Drilling is set to commence as soon as possible following completion of the agreements - targeting 2014 subject to the normal regulatory requirements and rig availability, said the company, with drilling and testing specifically planned to take the project towards commerciality.
The farminees will pay Falcon AUD20 million cash on completion of the agreements. Origin and Sasol to each earn 35% interest in the permits, Falcon will retain a 30% interest. Origin is to be the Operator.
The companies will pay for the full cost of completing the first five wells, estimated at AUD64 million, and will fund any cost overruns, said Falcon. This is expected to be completed within the first three years.
Shares in Falcon Oil & Gas were trading 25.22% higher at 10.8 pence per share Friday morning, one of the biggest gainers on the AIM All-Share market.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
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Falcon Oil (FOG)