Australian energy company WHL Energy has received notice that regulatory approvals will be granted for the previously reported farm-out agreement with Ophir Energy. Under the agreement Ophir is farming-in to earn a 75% interest in WHL Energy’s offshore Seychelles petroleum exploration project area.
Under the terms of the farm-out agreement, final approval was required from the Government of the Seychelles and its regulatory representative, PetroSeychelles, for the farm-out and an amended and restated Petroleum Agreement (PA). WHL Energy is pleased to report that the Government of the Seychelles and PetroSeychelles have now advised that regulatory approval for the farm-in agreement will be granted and have agreed to an extension of the current PA until April 30, 2014 to allow for all necessary documentation to be executed and completed allowing the new PA to be formalized.
The amended and restated PA includes variations to the minimum work commitments, extending the term of the current exploration period to 31 July 2016, a reduction in the size of the Seychelles permitted area controlled by the JV and the transfer of operatorship over the project areas to Ophir. The receipt of this notice following the earlier Farm-Out Agreement will permit the execution of the PA later this month. This step will meet the final condition required for Ophir and WHL Energy to complete and execute the Joint Operating Agreement (JOA).
WHL Energy Managing Director, David Rowbottam, said: ‘We have made significant progress in moving forward with this quite complex, international agreement. I would like to personally thank the Seychelles Government and PetroSeychelles for their diligence, hard work and support in recommending the all-important regulatory approval to allow our agreement with Ophir to continue to move forward.’
‘This is not only a tremendous opportunity for WHL Energy and its shareholders, but for the people of the Seychelles, with Ophir Energy able to bring its technical expertise, experience and strong cash balance to support exploration of the Seychelles’ petroleum prospectivity to unlock the high value potential contained within this large and vastly under explored exploration area. We look forward to executing the final documentation for the farm-out to become unconditional before the end of this month, heralding the official start-up of our JV with Ophir Energy,’ Mr Rowbottam said.
As announced previously, on meeting the conditions of the farm-out 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 past costs. Ophir Energy will also fully fund the acquisition of approx. 1,500 km2 of 3D seismic, up to a total amount of US$17 million. WHL Energy recently closed an invitation to tender period for the acquisition of the initial 3D seismic programme and has received a number of quality applications. Recommendations on the most suitable contractors will be made in the near future to Ophir Energy as the incoming operator.
As part of the terms of the new PA, WHL Energy and Ophir Energy have agreed to relinquish portions of the Seychelles licenses, reducing the permitted area from 17,345 km2 to 12,856 km2.