Oilex noted that an agreement has been reached between the Joint Venture participants in Permit EPP27 and the Australian Joint and Designated Authority in which the parties have agreed that the Joint Venture is not required to drill a commitment well in the Permit in consideration for entering into a Good Standing Arrangement (GSA) with the Government.

At the same time the Joint venturers have also separately entered into a Deed of Settlement and Release under which Great Artesian Oil and Gas Limited ('GAOG') agrees to release Oilex Ltd, Videocon Industries Ltd ('VIL') and Gujarat State Petroleum Corporation ('GSPC') from their obligations in relation to drilling an exploration well in the Permit under the terms of their Farm-in Agreement entered into with GAOG in 2006, in consideration for Oilex, VIL and GSPC agreeing to bear GAOG's share of the GSA obligations.

Oilex considers this to be an acceptable outcome as a well in EPP27 could not be technically or commercially justified on available data.

Under the GSA, the Joint Venture has no further obligations in respect of the Permit which is returned to the Government.

The parties to the GSA may expend their share of the GSA either solely, or with another party to the GSA or with a third party not subject to the GSA. Any expenditure must be in respect of field activities in the three year primary term on re-released offshore acreage in Australia which is awarded during the next two bidding rounds pursuant to a successful bid by that party (whether alone or with other parties to this GSA or with a third party).

As an alternative to bidding on re-released acreage, the obligations of a party under the GSA may be satisfied by the party expending their commitment under the GSA in the primary term of newly released offshore acreage in Australia which is awarded during the next two bidding rounds pursuant to a successful bid by that party (whether alone or with other parties to this GSA or with a third party), provided that there is no bid made in competition for that acreage by an entity which is not a party to this GSA.

Tags: Oilex