I would love to know the specifics of the Farmin Agreement with CNOOC. I have attempted to look into the meaning of "participating interest" and found that a participating interest exists if a corporation (CNOOC in this case) provides capital or causes capital to be provided to another corporation (Exoma) in order to be durably linked to that corporation in furtherance of its own activities. A participating interest is defined as an interest held by a corporation in the shares of another corporation which it holds on a long-term basis for the purpose of securing a contribution to its activities by the exercise of control on influence arising from that interest. The proportion of exploration and production costs each party will bear and the proportion of production each party will receive, are normally set out in the operating (Farmin) agreement. Under the terms of the Exoma Farmin Agreement, CNOOC has acquired a 50% participating interest in Exoma?s ATP 991, 996, 999, 1005 and 1008 located in the central Queensland Galilee Basin by contributing $50 million towards exploration and appraisal expenditure during the Farmin Period, expiring on 31 August 2013. I assume from the above definitions derived from various sources that this Farmin will simply provide CNOOC a durable link to Exoma in furtherance of its own activities and secure a contribution to its activities by the exercise of control on influence arising from the 50% participating interest. What all that means in practice, or what proportion of exploration and production costs each party will bear and what proportion of production each party will receive, I have no idea. I assume the Farmin Agreement is commercial-in-confidence and thus not available to shareholders, but the sooner these details are disclosed the sooner the market will be able to better assess and respond to the value of EXE.
EXE Price at posting:
21.5¢ Sentiment: LT Buy Disclosure: Held
