West Perth-based gas explorer Westralian Gas and Power Ltd will allow Sydney-based ROC Oil to explore and drill two wells in the Vlaming Sub-basin, between Rottnest and Mandurah, in a deal worth $37 million.
West Perth-based gas explorer Westralian Gas and Power Ltd will allow Sydney-based ROC Oil to explore and drill two wells in the Vlaming Sub-basin, between Rottnest and Mandurah, in a deal worth $37 million.
The full text of a Westralian announcement is pasted below
Perth-based Westralian Gas and Power (WGP) with joint venture partners Lempika Pty Ltd (25%) and Emphazise Pty Ltd (25%), are pleased to announce the signing of a $37 million heads of agreement with ROC
Oil assigning it the rights to explore and drill two wells in two offshore petroleum permits W05-21 and W05-22, comprising 4530 sq km, in the Vlaming Sub-basin ranging from Rottnest Island to Mandurah.
Under the terms of the Farm-in Agreement, which is subject to government approval, ROC has acquired a series of three options that can be sequentially triggered by funding a three staged work programme. ROC has already committed to funding the first earning stage whereby it will acquire an initial 20% interest in the two permits and be appointed Operator, by funding 100% of A$2 million of pre-seismic exploration activity.
It is ROC's current intention to also commit to the second earning stage whereby it will acquire an additional 20% interest in each permit by funding 100% of a A$5 million 2D/3D seismic programme. If ROC commits to the third earning stage, the funding of 100% of a well in each permit up to a total cost of A$15 million per well, will earn an additional 40% interest in the permit in which the well is located.
On this basis, if ROC exercised all its options it would acquire 80% interest in each permit for a total cost of A$37 million.
WGP Chairman Peter Briggs said he is delighted with the deal which provides free carry for WGP with all exploration costs through to production met by ROC Oil. "ROC is a strong player with a wealth of experience in
exploration and production within the Perth Basin so they are a natural fit for us."
"The leases, on Perth's doorstep, are strategically located close to the Kwinana refinery and are described by the Dept in promising terms," Mr Briggs said.
Mr Briggs said: "WGP is committed to building its energy portfolio by seizing further energy opportunities through increased exploration and beneficial 'free carry' partnership arrangements such as with ROC Oil (and ERM Gas
last month). This will allow WGP to carry out more exploration and drive other operations through to production."
Lempika and Emphasize are family companies of Alan Burns. Mr Burns, who is also a director of WGP said, ROC has experience in the Perth Basin, which is nicely matched by Burns family companies' activities on the same
acreage.
Background:
The permits are described by the Department of Industry and Resources as having "...a petroleum system present..." with "...seismic data providing further evidence of a potential active petroleum system in Areas W05-21 & W05-22, with an apparent gas chimney imaged".
WGP - A Diversified Energy Player: Since floating on the ASX in April 2005 as a dedicated coal seam gas explorer, WGP has successfully transformed itself into a diversified energy player boasting a portfolio of promising assets ranging from coal seam gas exploration, oil and gas exploration, oil production, through to CO2 geosequestration.
Coal Seam Gas: In July, WGP signed a deal with ERM Gas, a wholly owned subsidiary of ERM Power a developer of gas fired power stations, to explore WGP's extensive coal seam gas leases in south west Western Australia and fund their development with the intent of supplying coal seam gas to ERM Power stations in WA.
Kentucky USA: WGP 100 percent owns Sunset Energy LLC with over 3000 acres of oil leases in Cumberland County Kentucky USA. This provides WGP an ongoing and increasing revenue stream due to a successful and continuing exploration program. The company is three wells into a ten well drilling program.
Perth Basin: In addition to the leases covered by the ROC Oil deal, the company also holds a 450 sq km onshore permit EP455 located 12 km south of Eneabba which is prospective for gas.
CO2 Geosequestration: The Company is also investigating the provision of geosequestration of CO2, from BP/Rio's proposed Kwinana power station, into formations located in its Perth Basin lease area.
