MEO ropes in new partner for nine more wells 07/07/2008 10:31:13 GMT
MELBOURNE, AUSTRALIA: MEO Australia Ltd. has unveiled a strategic alliance that will fund the drilling of up to nine wells in the company's three offshore permits WA-359-P, WA-360-P and WA-361-P.
Resource Development International Ltd. (RDI), an unlisted public entity associated with and chaired by Brisbane-based billionaire Professor Clive Palmer, will fund the drilling costs for up to nine wells in return for 35 percent interests in each of the three permits. Once the farm-ins are complete, MEO's interests will be reduced to 25 percent for each permit.
RDI has initially committed to fund 80 percent of the first US$31.25 million and a subsequent 52.5 per cent of the drilling costs on Zeus-1 wildcat to test a multi-TCF gas prospect in WA-361-P. MEO will fund 10 percent of the well to retain 25 percent of the permit, while partners Cue Energy and Gascorp may exercise the option to fund up to a combined 10 percent of the well costs to each retain a 20 percent interest.
RDI agreed to fund two additional appraisal wells in the event of a drilling success at Zeus-1. RDI will fund one more wildcat in WA-361-P if Zeus-1 is unsuccessful. The funding of the additional exploration well is subject to RDI's successful listing on the Hong Kong and Australian Stock Exchanges.
The strategic alliance with RDI will lead to an injection of A$11.8 million (US$11.3 million) fresh equity into MEO. RDI's associated company, Mineralogy Pty Ltd. will buy more than 21 million shares at A$0.55 (US$0.53) a share in MEO.
The capital raised will fund the ongoing geotechnical studies in MEO's NT/P68 permit. Mineralogy is also granted options to buy 14 million shares in MEO at A$0.65 (US$0.62 ) on or before Sept. 30, 2008.
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