7th Apr 2014 09:54
LONDON (Alliance News) - Kea Petroleum PLC Monday said it has signed a deal with MEO Australia Ltd, to provide a stake in the PEP 51153 licence, which includes its Puka Discovery, in New Zealand.
The oil and gas exploration and development company said it has now agreed to a NZD14 million staged work programme on site to boost production and further appraise the Puka discovery.
As part of the deal, MEO will earn 30% interest in the site via a payment of NZD4 million in order to complete the phase 1 plan for the site, which consists of the workover of both existing Puka wells to boost production, drilling of a new well and to test the suspended Douglas 1 well.
Following the completion of this, MEO can elect to earn a further 20% interest in the site through a further payment of NZD7.5 million, which will be used for a second phase on site.
The second phase would include the construction of a new central drilling and production facility, drilling of further appraisal wells and horizontal drilling techniques.
The company said its phase 1 plan is scheduled to start at the end of June and MEO can elect to earn the additional interest within six months of receiving assessment of phase 1 results.
Kea also said that at the conclusion of Phase 1 or 2, the parties have also agreed that MEO has the option to enter into negotiations to acquire KEA's remaining interest in the Permit.
MEO Australia is an ASX-listed independent oil and gas company with a portfolio of exploration and appraisal projects located offshore Northern Australia and Indonesia.
In December, the company said it had signed an agreement over the staged farm-out of interest in the site to a company listed on the Australian Stock Exchange. In February, Kea confirmed that due diligence was continuing on the deal and conclusion is expected during the first quarter.
The Puka site provided 39,500 barrels of production in the six months to November, but had fallen to 2,532 in January of this year due to mechanical failure of the down hole pump. Kea said that planning is underway to make significant repairs to the down-hole equipment which should be completed for production to recommence during March.
Kea Petroelum shares were down 15.9% to 2.65 pence, making it the top AIM faller Monday.
By Tom McIvor; [email protected]; @TomMcIvor1
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