Statoil Australia Oil & Gas AS will take a farmout from PetroFrontier Corp., Calgary, on PetroFrontier’s four exploration permits and two exploration permit applications in the southern Georgina basin in Northern Territory, Australia.
Under the agreement, subject to approval by the Foreign Investment Review Board of Australia, Statoil will have the option to earn up to 65% of PetroFrontier’s working interests in EP 103, EP 104, EP 127, and EP 128 and in EPA 213 and EPA 252 in exchange for exploration program related payments and carried costs of as much as $210 million (US) in three phases.
Statoil said its objective is to access shale plays at an early stage at low cost and to develop them into potentially high value assets.
Under Phase 1 in 2012 and 2013, Statoil and PetroFrontier will each contribute $25 million. Depending on results of the current drilling and fracturing program, the parties will agree on further drilling locations and seismic, in part to ensure that the work commitments for the respective EPs are kept current. PetroFrontier will be operator in Phase 1.
At the end of Phase 1, Statoil will have the option to acquire 25% of PetroFrontier’s working interest by reimbursing PetroFrontier for its $25 million Phase 1 contribution and by committing to proceed with Phase 2.
In Phase 2 in 2014 and 2015, the parties will conduct a further joint exploration program of $100 million with Statoil contributing $80 million. Statoil has the option of becoming operator in Phase 2. Once it has contributed the $80 million, Statoil will have earned a further 25% of PetroFrontier’s working interest in all of the EPs and EPAs and will have the option to commit to proceed with Phase 3.
Phase 3 in 2016 will be a further $80 million joint exploration program with Statoil as operator contributing all $80 million and no outlay from PetroFrontier. Statoil will earn a further 15% of PetroFrontier’s working interest.