Falcon Oil & Gas announce Completion of Australian Beetaloo Basin Farm-Out
Falcon Oil & Gas Ltd. (TSX VENTURE:FO)(AIM:FOG)(ESM:FAC) (the “Company”) is pleased to announce, that further to its press release of 2 May 2014, its 98% subsidiary, Falcon Oil & Gas Australia Ltd (“Falcon”), has completed its Farm-Out Agreement and Joint Operating Agreement (collectively “the Agreements”) with Origin Energy Resources Limited, a subsidiary of Origin Energy Limited (“Origin”) and Sasol Petroleum Australia Limited, a subsidiary of Sasol Limited (“Sasol”), (collectively referred to herein as the “Farminees”), each farming into 35% of Falcon’s Exploration Permits in the Beetaloo Basin, Australia (the “Permits”).
Key transaction details are:
— Falcon retains a 30% interest in the Permits.
— Falcon has received A$20 million cash from the Farminees.
— Origin is appointed as Operator with immediate effect.
— Farminees to carry Falcon in a nine well exploration and appraisal program over the next four years, detailed as follows:
** 3 vertical exploration/stratigraphic wells and core studies;
** 1 hydraulic fracture stimulated vertical exploration well and core study;
** 1 hydraulic fracture stimulated horizontal exploration well, commercial study and 3C resource assessment; and
** 4 hydraulic fracture stimulated horizontal exploration/appraisal wells, micro-seismic and 90 day production tests.
— Drilling/testing specifically targeted to take the project towards commerciality.
— Farminees will pay for the full cost of completing the first five wells estimated at A$64 million, and will fund any cost overruns. This drilling programme will commence by mid 2015.
— Farminees to pay up to the full cost of the next four horizontally fracture stimulated wells, 90 day production tests and micro seismic with a capped expenditure up to A$101 million, any cost overrun funded by each Party in proportion to their working interest.
— As part of the agreements to reduce the overriding royalties from what was originally 12% to 1%, Farminees will pay their pro-rata share (US$14million (approx. A$15 million)) of the two five year call options entered into by Falcon as part of agreements announced on 1 November 2013 with CR Innovations AG and 17 December 2013 with the TOG Group, should Farminees and Falcon decide to exercise the call options.
— Farminees may reduce or surrender their interests back to Falcon only after:
** the drilling of the first five wells or
** the drilling and testing of the next two horizontally fracture stimulated wells.
Philip O’Quigley, CEO of Falcon commented:
“I am delighted to announce we have completed the Agreements with Origin and Sasol for our transformational Farm-out of our Beetaloo acreage. Together with A$20 million cash up front, the deal is worth up to approximately A$200 million to Falcon. We look forward to the immediate commencement of the nine well exploration and appraisal program.”
Source: Falcon Oil & Gas Ltd
