Hi KiwiThat is another of those pesky mysteries.In the open...

Hi Kiwi

That is another of those pesky mysteries.

In the open briefing document the farmin terms were mentioned by the CEO, Jurgen Hendrich:

'We estimate that the two wells will cost in the order of US$60 million each. The actual cost will be a function of the final well design and nature of the production testing program agreed with the successful farminee. We will be offering an equity interest of up to 50% in the Heron discovery to the successful farminee in return for an agreement on the funding of the appraisal drilling program.'

whilst in the NTP/68 data room document it notes:

As part of the farm-out terms, MEO is proposing two appraisal wells - one on Heron South and one on Heron North ........'.

So it seems like a similar deal with possible back costs. Petrofac paid only 25% of the Heron well costs as the ASX release shows:

http://www.asx.com.au/asxpdf/20070604/pdf/312s0gywlyfdlx.pdf

and there have been seismic costs since.

Of note to is that Air Products has a 50% agreement with MEO in the TSMP only. MEO have 100% equity in NTP/68 and the TSLNG project so I think that the agreement will be participation in the appraisal and, if successful, also in the TSLNG project.

There has been conjecture that possibly PBR may be looking at further pemit participation in Oz. In the event of success at 360P a close working relationship with MEO could see PBR looking towards Heron and the TSLNG as a natural progression. Whoever the partner is the TSLNG would be included in the mix IMO.

This will leave Blackwood. If Magellan and its PPs agree to partially supply the TSMP and possibly JV the project (unitisation) this would leave Air Products 50% and MEO sharing the other 50% TSMP costs with the rest or MEO keeping its 50% share. Funding for MEO is the problem which management will be looking at.

By keeping Blackwood 100% separate MEO could develop the field themselves sometime down the track and retain 100% income.

A number of boxes need to be ticked but the pieces seem to fit IMHO.

The mystery is tantalising.

#:>))