Nido was awarded SC 54 on 5 August 2005 and acquired a 100% working interest with the intention of farming out part of its interest to manage its risk.

In undertaking its initial evaluation of the SC 54 contract area, Nido recognised as good oilfield practice the advantage of acquiring additional seismic data in order to mature existing prospects and leads prior to the commencement of the drilling program. Yilgarn’s offer to farm in to SC 54 is attractive because it incorporates both a seismic and a well programme.

Yilgarn will earn a total 40% working interest in the SC 54 contract area upon the completion of two stages. In the first stage, Yilgarn will fund the acquisition and processing of seismic data on a 4:3 promote basis. This is based on estimated costs of US$6 million for the seismic programme. Following the technical evaluation of the seismic data, Yilgarn is required to fund the drilling of a well on a 2:1 promote basis as the second stage to earn its 40% working interest. This is based on estimated costs of US$15 million for the well.

The farm in offer is conditional upon Yilgarn obtaining finance for the seismic programme, relevant approvals, conducting a due diligence and executing a formal farm in agreement with Nido.

Nido’s Managing Director, Mr David Whitby, said "This is a very successful outcome for Nido. In real terms, Nido will retain a 60% working interest in SC 54 and limit its exposure to around 27% of the estimated capital costs for the seismic programme and the well".