Independent oil and gas company MEO Australia Limited announced that it has assigned its 50% interest in the WA-454-P exploration permit, in the Bonaparte Gulf, offshore northern Australia to Origin Energy Resources.
MEO said the assignment comes after extensive consideration of its strategic focus and allocation of capital to its asset portfolio, and following its failed search for partner for WA-454-P to minimise its remaining exposure to overall exploration and drilling costs.
“MEO determined that WA-454-P no longer had the risk-reward profile that matched the Company’s strategic objectives, which have increasingly moved towards lower cost onshore projects such as the Block 9 Production Sharing Contract in Cuba,” the company told the ASX on Monday.
MEO Managing Director and CEO Peter Stickland said MEO received A$5.6 million in cash payments from Origin from the Original farm-out agreement for WA-454-P, in 2013-2014.
He said the agreement includes provisions to effectively back-date the assignment to December 2015 as consideration for MEO’s 50% interest, allowing the company to avoid all expenditure associated with WA-454-P in 2016 and 2017, when an exploration well is obligated to be drilled and substantial expenditure incurred.
“While it is disappointing to walk away from WA-454-P, the Company believes this is the most appropriate course of action given the current cash reserves and macroeconomic factors,” Mr Stickland explained.
“The exploration savings from the withdrawal enables MEO to focus on its lower cost and higher priority project, Block 9, onshore Cuba.”
