Cypress Petroleum Pty Ltd., a wholly owned Australian subsidiary of TAG Oil Ltd. (TSX: TAO and OTCQX: TAOIF), has entered into a definitive asset purchase agreement with Southern Cross Petroleum & Exploration Pty Ltd. to acquire a 100% interest, subject to underlying royalties, in Petroleum Lease 17 and all related assets, which are located in Australia's Surat Basin.
If approved, TAG will acquire a 100% right, title and interest in PL17 and all related assets for consideration of AUD$2,500,000, payable to Southern Cross as follows:
- AUD$750,000 (less the AUD$40,000 non-refundable deposit already paid) payable in cash on the closing date;
- AUD$500,000 payable in cash on July 20, 2017;
- AUD$500,000 payable, at the sole discretion of Cypress, in cash or satisfied by shares of TAG, on the second anniversary of the closing date; and
- AUD$750,000 payable, at the sole discretion of Cypress, in cash or satisfied by shares of TAG, on the third anniversary of the closing date.
PL 17 covers 25,700 acres in the Surat Basin. Two fields, Bennett and Leichhardt, are located within the permit and have produced intermittingly from the Permian formation since being discovered in the 1960s, with current production from the Bennett field of approximately 15 b/d of light oil. The Permian oil play is the primary conventional play opportunity within PL 17, and a work program is being designed to enhance the understanding of the reservoir's properties.