farm out terms

Interesting article from the petroleum news web site today re: Arrow Energy.

Given the relatively recent upgrade at Liulin, and the fact that it is an in-principle agreement... Where does that leave our Molopo???

Arrow leverages bigger farm-out terms


Tuesday, 10 April 2007

FOLLOWING a recent upgrade to its coal seam methane reserves, Arrow Energy has revised the terms of a farm-out agreement with Swedish energy company Energy Infrastructure Group AB. Arrow will now keep a higher stake in its assets while increasing bonus payments for reserves certification milestones.



Arrow Energy drilling in the Clarence-Moreton Basin

At the end of February, Arrow signed a letter of intent with EIG in which the companies agreed to fast-track the development of several assets by agreeing to share the interest 50:50.

But under the revised LOI, Arrow said EIG would now take a 30% stake in the Daandine power generation project.

This follows a major boost to reserves at Daandine by 221 petajoules, a rise from 25PJ to 246PJ, late last month. The increase saw Arrow's total net 2P reserves jump from 498PJ to 719PJ.

Despite the lower Daandine interest, EIG will continue to keep a 50% stake in the other assets subject to the farm-in deal, namely blocks in the Clarence-Moreton and Coastal Queensland basins, and the Dundee project.

Also, the milestone bonus payments have been increased from $75 million to $115 million. These payments will see EIG pay Arrow $30 million each time it achieves certification of 250PJ, 500 PJ and 750PJ of gross proven and probable gas reserves on the portfolio. It will also make a fourth milestone payment of $25 million for achieving 250PJ of 2P reserves on PL230.

As per the original agreement, EIG will contribute $150 million to exploration, appraisal and potentially development work, and will pay Arrow all of its costs spent on the assets since March last year.

Arrow said it expects to close the deal before the end of this month.

EIG is a privately owned energy asset holding company based in Sweden with energy development subsidiaries active in the Asia-Pacific.

http://www.petroleumnews.net/StoryView.asp?StoryID=96848


Has anyone got any comment or information that would see Molopo re-jig their agreement?