Rey joins Key, Caracal venture

Perth oil and gas explorer Rey Resources has agreed to farm into the Dunnart-2 exploration well joint venture in the Perth Basin with Key Petroleum and Caracal Exploration.

Under the terms of the agreement, Rey will earn up to 43.47 per cent in equity in the exploration permit EP437 by contributing about 87 per cent of the costs, capped at $1.7 million.

After the farm-out, Key will lose about 33 per cent of their beneficial interest in EP437, putting them at an equal interest with Rey at 43.47 per cent.

Caracal will hold the remaining 13.06 per cent participation after the farm-out.

The agreement is still waiting on Foreign Investment Review Board approval, which is likely to be finalised in the coming weeks.

Key Petroleum managing director Kane Marshall said the farm-out would allow Key to better control costs associated with exploration and drilling activities to deliver its strategic exploration goal.

“It also comes at a time where no onshore exploration wells are being drilled in Western Australia,” he said.

The Dunnart prospect has a potential resource estimate of 2 million barrels of recoverable oil.

Rey Resources’ share price was up 4.3 per cent to 9.7 cents at 11:45am WST.