Kea Petroleum has entered into an agreement to acquire a major interest in two onshore Australian petroleum exploration areas; PEL 155 in South Australia's Otway Basin and ATP 837P in Queensland's Surat Basin. In both cases, Kea will become the licence Operator and will earn 50% interest in the two licence areas by part funding a total of three wells. All the drilling targets are mapped on recently acquired, good quality 3D seismic, and all are near to existing production.

Subject to statutory approvals Kea is assigned a 50% interest in PEL 155, with the remaining 50% being held by Energetica Otway Pty Ltd and Rawson Otway Pty Ltd Energy. Subject to statutory and other approvals, Kea is assigned a 50% interest in the oil and gas rights and 15% of the coal seam rights in ATP 837P, with Energetica Resources Pty Limited ('Energetica') and Rawson Resources Limited ('Rawson') both holding 25% of the oil and gas rights and 7.5% each of the coal seam rights, with remaining coal seam rights held by TruEnergy Queensland Pty Ltd.

Kea will contribute A$4m (£2.5m) of the first A$6m (£3.75m)of drilling expenditure to be incurred in PEL155 and ATP 837P, and if required up to 11% above this figure (i.e. up to a further A$440k of A$660k gross in the event of overruns during the initial drilling), and 50% of costs thereafter. This initial sum is expected to be sufficient to drill all three wells, although the costs of testing and completion in the event of discovery are likely to be extra.

Tags: Kea Petroleum