Drillsearch Energy Ltd. has signed a binding term sheet with QGC Pty Ltd. over new terms covering their ATP 940P Cooper Basin shale and tight gas joint venture in central Australia. Drillsearch owns 40% of ATP 940P and is the operator. QGC owns the remaining 60%.
Under the original agreement announced in July 2011, QGC committed to a three-stage exploration and pilot production appraisal program of six wells to acquire a 60% interest in ATP 940P. QGC also agreed to fund $81.45 million (AUD 90 million) of the first $90.5 million (AUD 100 million) of that program.
The parties have agreed to amend the terms of the joint venture and farm-in agreements to include:
- Consolidation of the three stages in the initial agreement to a single stage, and removal of QGC’s associated withdrawal rights, thereby bringing forward the remainder of QGC’s carry of the initial $90.5 million (AUD 100 million) expenditure
- Expansion and extension of the initial agreed farm-in work program from six wells to a commitment to a 10-well program with potential for further acceleration
- Drillsearch to remain as operator of ATP 940P until the end of the current permit term in November 2015. QGC will then have the option to assume operatorship
Furthermore, under the terms of the original farm-in agreement, and as outlined in the ASX announcement July 27, 2011, QGC held a right to acquire all of Drillsearch’s interest in ATP 940P if a change of control transaction occurred involving Drillsearch before completion of the second stage of the exploration program. Under the new terms, this provision is no longer applicable.
The ATP 940P Joint Venture covers more than 500,000 acres (2,000 square kilometers) of the Central Cooper Basin Nappamerri Trough shale and tight gas fairway in Southwest Queensland.