Premier and Rockhopper Exploration plc have signed a heads of agreement with Falkland Oil and Gas Limited (FOGL) to farm-in to licences PL004a and PL004c, conditional on the completion of this morning’s announced combination of FOGL and Desire Petroleum plc. Licences PL004a and PL004c, which include the Isobel/Elaine and Jayne East prospects, are situated in the North Falkland Basin, adjacent to the Sea Lion development.
Under the agreement with FOGL, its share of costs for an exploration well on the Isobel/Elaine prospect (PL004a) and an exploration well on the Jayne East prospect (PL004c) will be carried by Premier and Rockhopper. Under a prior agreement with Rockhopper, Premier and Rockhopper will split the revised equity interests in the ratio 60/40. Under the same prior agreement with Rockhopper, Premier have agreed to fund up to US$48 million of Rockhopper’s share of three exploration wells in the basin.
The revised ownership in the two licences on completion of the transaction will be as follows: FOGL/Desire now hold 40% in PL004a, down from 92.5%, and 40% in PL004c, down from 75%. Premier now holds 36% interest in both licenses, up from 4.5% and 15%, respectively in PL004a and PL004c. Rockhopper now holds 24% in both licenses, up from 3% and 10%, respectively.
Thee farm-in is subject to completion of the combination of FOGL and Desire and customary Falkland Islands Government approvals. Exploration drilling is targeted for 2014 and 2015, subject to finalization of a rig contract.
Premier's CEO Simon Lockett, said: "We are delighted to increase our equity interests within these two licences which we believe have the potential to add significant value to our existing interests in the Falkland Islands. The revised equity interests and cost sharing agreements will ensure that these licences can be included in the next phase of the planned Falkland Islands exploration program.”
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