Australian energy company WHL Energy Limited has signed a farm-in agreement with Ophir Energy plc under
which Ophir will farm-in to earn a 75% interest in WHL Energy’s exploration interests offshore the Seychelles.
Under the terms of the farm-in, Ophir will fully fund the acquisition of 1,500km2 of 3D seismic, up to a total amount of US$17 million (the “Initial Seismic”). On meeting the conditions of the farm-in agreement, including formal regulatory approval by the Government of the Seychelles, Ophir will pay WHL Energy US$4 million in cash for partial recovery of back costs.
Following the acquisition and evaluation of the Initial Seismic, and on or before 31 July 2015 (or 31 December 2015 if a seismic vessel has not commenced data acquisition by 31 May 2014), Ophir may either withdraw from the farm-in or exercise the option to both:
- fully fund the acquisition of a further 1,000km2 of 3D seismic, up to a total amount of US$12 million (the “Additional Seismic”); and
- fund 90% of the costs of the first exploration well, up to a total amount of US$30 million (the “Exploration Well”).
Upon exercising the option to retain its interests, Ophir will pay WHL Energy a further US$2 million in cash for further partial recovery of back costs.
In preparation for the farm-in agreement the joint venture has already commenced or completed the following:
- Requested the approval of the Government of the Seychelles and its regulatory representative PetroSeychelles for the farm-in;
- Lodged the formal request to the Government of the Seychelles and PetroSeychelles for an amended and restated petroleum agreement, under which the minimum work commitments will be varied to undertake a phased 3D seismic program in 2014 and 2015 and extending other commitments and the term of the current exploration period to 31
July 2016; and
- Completed substantial technical, commercial and legal due diligence.
Following execution of the farm-in agreement, Ophir and WHL Energy will finalise current negotiations for the completion of a fully documented Joint Operating Agreement (“JOA”) to undertake the agreed work program. WHL Energy has already released an “Invitation to Tender” for the Initial Seismic.
WHL Energy Managing Director, David Rowbottam, said “the Company is delighted to have secured a farm-in partner of Ophir Energy’s standing. Having a company with the record of Ophir Energy partner together with WHL Energy to take the ‘flagship’ Seychelles project forward is a tremendous milestone for the Company. Since acquiring the Seychelles interests in 2010 the Company has worked extremely diligently to put together an exploration package that would attract a suitably qualified international oil and gas company to join and further develop what the Company sees as a world class asset. Achieving this great result has been most pleasing given the difficult farm out market and current business climate.”
“In Ophir Energy, which has a strong global reputation for technical excellence and exploration success – particularly in East and West Africa – the Company believes it has found an ideal partner. The Company looks forward to working closely with Ophir to progress the Seychelles project to the benefit of WHL Energy’s shareholders and the people of the Republic of the Seychelles,” Mr Rowbottam said.
Nick Cooper, CEO, commented, “Ophir’s preferred exploration model is to secure large operated positions, with significant running room, in frontier basins where the fundamental elements of a hydrocarbon system are in evidence. We are therefore pleased to have executed this material new basin entry into the offshore East Africa area. Our initial analysis already highlights a portfolio of structural prospects and leads and we look forward to pursuing an active exploration programme in the area to test this thesis.”