Desire Petroleum plc, the exploration company wholly focused on the North Falkland Basin, is pleased to announce that it has agreed the terms of a farm-out agreement, subject to the approval of the Falkland Islands Government, with Rockhopper Exploration PLC (Rockhopper) over the northern section of its Tranche D (PL004) licence.
The area farmed out covers approximately 23% of Tranche D and comprises part of the area over which a 3D seismic survey was completed earlier in 2011. Processing of the seismic data over the area farmed out has been fast tracked and has recently been interpreted and evaluated. The principal terms of the farm-out, which include the commitment by Rockhopper to drill a firm well with the Ocean Guardian rig during the current drilling campaign, are as follows:
* The area farmed out has been divided into two areas (Areas 1 and 2). Desire still retains 92.5% of the remainder of Tranche D.
AREA 1
* Area 1 includes a possible extension of Rockhopper’s Sea Lion oil discovery, the recently delineated Shona West prospect,the Casper West prospect and part of the Beverley prospect.
* Rockhopper will pay 100% of the committed well in Area 1 to earn a 52.5% interest. With their existing 7.5% interest, this will bring their equity to 60% with Desire at 40%. Rockhopper will assume operatorship of this area.
* This well will be drilled during the current campaign using the Ocean Guardian rig.
* This transaction is subject to regulatory approvals including consent from the appropriate authorities to drill the well and the change of operatorship by November 11 2011. Discussions with the Falkland Islands Government and the other authorities are underway.
AREA 2
* By drilling the committed farm-in well in Area 1, Rockhopper will also earn a 17.5% interest in Area 2 which, including Rockhopper’s existing 7.5% interest, will bring its equity to 25% in that area, with Desire retaining 75% equity and the operatorship.
* Area 2 includes the recently delineated Jayne, Shona East, Casper East and Catriona prospects and the remainder of the Beverley prospect.
* Rockhopper, subject to technical approval, will support, at their 25% equity, a well drilled in Area 2 during the current Ocean Guardian drilling campaign should Desire decide to drill a further well. Drilling this well will depend on further technical work currently being undertaken by Desire and subject to Desire raising any necessary funds.
* This well would also be subject to all regulatory approvals.
* The farm-out agreement is conditional upon Rockhopper raising additional capital through an equity placing.
Stephen Phipps, Chairman of Desire, commented, “We are very pleased that this agreement to farmout part of Tranche D to Rockhopper will enable another well to be drilled on our acreage in this current drilling campaign, at no further cost to Desire. Under the terms Desire still retains a significant interest in the prospectivity of Tranche D. In addition, the recently evaluated fast track 3D seismic data shot earlier this year has brought some exciting new prospects into play and underpins our core belief in the prospectivity within our acreage. A CPR containing a detailed evaluation of the new data and prospects is being finalised and will be available shortly.”
