MEO Australia Ltd. has executed a binding option agreement with Apache Northwest Pty Ltd. in relation to the AC/P50 and AC/P51 exploration permits in the Vulcan Sub-Basin off northern Australia. Under the agreement, Apache has an option until Sept. 30 to elect to acquire a 70% interest in, and assume operatorship of, the permits commencing upon their renewal scheduled for April 2015.
On exercise of these options, Apache will carry MEO’s share of all costs up to and including the first well to be drilled in each of the permits. Well costs, including testing, will be subject to a cap.
The permits are currently in the final year of their six-year exploration term. In the event Apache exercises its option, exploration efforts will initially focus on the AC/P51 Ramble On oil prospect. MEO has defined the prospect on 3D seismic and estimates it to contain 39 million barrels gross prospective recoverable resources .
Should Apache exercise the option, the parties will work together to renew the permits for another five years on terms mutually acceptable to MEO, Apache, and the titles administrator. MEO and Apache have agreed to propose a firm well in the primary term of the AC/P51 renewal. The option agreement includes provisions for Apache to elect not to participate in AC/P50 if renewal cannot be obtained on satisfactory terms.