MEO Australia has reached an agreement to assign its 50% interest in the WA-454-P exploration permit in the Bonaparte Gulf, offshore northern Australia to Origin Energy.
MEO said on Monday that it had actively sought an additional partner for WA-454-P to minimize the company’s remaining exposure to overall exploration and drilling costs. However, due to the current depressed farm-out market, this was unsuccessful.
The firm is determined that WA-454-P no longer had the risk-reward profile that matched its strategic objectives, which have increasingly moved towards lower cost onshore projects such as the Block 9 production sharing contract in Cuba.
MEO received AU$5.6 million in cash payments from Origin from the original farm-out agreement for WA-454-P, in 2013-14.
The agreement includes provisions to effectively back-date the assignment to December 2015 as consideration for MEO’s 50% interest, allowing MEO to avoid all expenditure associated with WA- 454-P in 2016 and 2017. Following MEO’s assignment, Origin will have a 100% interest in the permit.
“While it is disappointing to walk away from WA-454-P, the company believes this is the most appropriate course of action given current cash reserves and macroeconomic factors. The exploration savings from the withdrawal enables MEO to focus on its lower cost and higher priority project, Block 9, onshore Cuba,” CEO Peter Stickland said.
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