meo executes binding farm-in agreement!!, page-8

Full announcment: (and MEO free carried for three wells!)


MEO Executes binding farm-in agreement with Petrobras International Braspetro BV
Key Points: MEO executes binding farm-in agreement for Exploration Permit WA-360-P with Petrobras International Braspetro BV, a subsidiary of Petrobras, Brazils National Oil Company MEO to be free carried for up to three wells and receive a cash consideration/bonus Farm-in is subject to Australian regulatory approvals including Foreign Investment Review Board
MELBOURNE, AUSTRALIA (April 14th, 2010) MEO Australia Limited (ASX: MEO) and Petrobras International Braspetro BV - a subsidiary of Petrobras, Brazils National Oil Company - have executed a binding farm-in agreement for the WA-360-P Exploration Permit in the Carnarvon Basin, offshore Western Australia.
Key terms of the farm-in agreement include:
- Petrobras to earn 50% equity in WA-360-P by funding 100% of the first well to a cap of US$41m (MEO retains 20% interest)
- Upon receipt of all regulatory and Australian Government approvals, including Foreign Investment Review Board approval, Petrobras will pay MEO a cash bonus of US$31.5 million and reimburse MEOs share of the past costs of approximately US$7.5 million
- In the event of a successful discovery, Petrobras will carry MEOs share of the cost to drill and test two follow up wells in the Permit to a cap of US$62 million per well, together with payment of an additional US$31.5m cash bonus in January 2011
- MEO to remain Operator until the completion of the first well after which Petrobras has the option to assume Operatorship
The farm-in represents Petrobrass initial entry into the Australian petroleum industry and is subject to receipt of relevant Australian regulatory and Governmental approvals including Foreign Investment Review Board approval. Applications seeking these approvals are in preparation.
MEO has secured an option over a drilling rig to drill the first well, Artemis-1, in late 2010. The Artemis prospect is estimated to contain mean prospective resources of approximately 12 Tcf proximal to established and planned LNG processing infrastructure.
WA-360-P Participants
Equity
Petrobras International Braspetro BV (a subsidiary of Petrobras)
50%*
North West Shelf Exploration Pty Ltd (MEO subsidiary)
20%*
Cue Energy Resources Limited (ASX: CUE)
15%
Rankin Trend Pty Ltd a wholly owned subsidiary of Moby Oil & Gas (ASX: MOG)
15%
* Following receipt of Australian regulatory approvals including Foreign Investment Review Board of equity transfer