Quadrant Energy will pay $10 million to withdraw from a joint venture with Buru Energy and Mitsubishi Corporation, which together own oil and gas exploration permits in the Canning Basin.
In November 2013, Quadrant (known as Apache Corporation at the time) signed a $25 million agreement to earn a 50 per cent stake in the permits, with Buru and Mitsubishi each owning 25 per cent.
The joint venture drilled several exploration wells, but these were deemed non-commercial and were subsequently plugged and abandoned.
As a result, Quadrant has opted to farm-out of the permits, and will pay Mitsubishi and Buru $4.9 million each, after costs, to fulfil its remaining obligations under the terms of the joint venture deal.
Buru and Mitsubishi will be the only holders of the permits.
“This is an appropriate resolution to the Coastal Titles farm-in agreement,” Buru chairman Eric Streitberg said.
“The original deal was struck in a very different oil price and operating environment, and we are very pleased that the parties have come to a mutually agreeable commercial resolution.
“The payment from Quadrant is a welcome cash injection for Buru which will be used to fund further exploration or appraisal and development programs on our core areas.”
Buru shares were 2.9 per cent higher to 35 cents each at 10:40am.