THE BOURSE WHISPERER: New Standard Energy (ASX: NSE) has executed an agreement with Green Rock Energy (ASX: GRK), under which Green Rock will hand over 100 per cent of its interests in the Laurel project in the Canning Basin of Western Australia to New Standard.
New Standard described the Laurel project as a large acreage position in an emerging regional play that is attracting a substantial amount of attention following the recent success of similar projects as that of Buru Energy (ASX: BRU).
Under the terms of the transaction the companies will terminate an Area of Mutual Interest (AMI) agreement involving the Laurel formation across the broader Canning Basin.
New Standard outlined further terms of the agreement that will result in the company retaining a 15 per cent equity interest in EP417 that was due to be transferred under a farm-in agreement with Green Rock.
New Standard will also assume Green Rock’s remaining 40 per cent interest in the immediately adjacent Seven Lakes SPA as a result of terminating the AMI Agreement.
New Standard will now own a 65 per cent operated interest in EP417 (Buru Energy 35 per cent) and a 100 per cent operated interest in the adjacent Seven Lakes SPA acreage.
New Standard’s net acreage position will increase to 1.183 million acres (4,788 square kilometres) across the Laurel formation.
New Standard will pay an upfront cash amount of $1 million to Green Rock Energy with the balance of $650,000 being deferred until either an exploration permit is granted in relation to the Seven Lakes SPA or nine months expires after the execution of agreements.
“This transaction provides us with a meaningful increase in equity levels across our Laurel project acreage and the commercial terms are very attractive when compared to the previous Green Rock farm-out and other comparative transactions on Canning Basin acreage involving the Laurel formation,” New Standard Energy managing director Sam Willis said in the company’s announcement to the Australian Securities Exchange.
“The strategic value of this transaction provides real options for us to progress discussions with interested parties seeking a meaningful exposure to the Canning Basin alongside New Standard as an active operator in the region.
“This continues to build on our major Canning Basin focus involving the prospective Goldwyer and Laurel formations.
“We see large potential upside in the emerging Laurel project as our second project in the Canning Basin and are delighted to have secured this additional equity on these terms.”
New Standard outlined its 2013 work program on the Laurel project will involve the following activities:
– EP 417 seismic data reprocessing and 2014 drill target selection;
– Sampling and geological studies;
– Regional information collation to understand recent Laurel successes; and
– Seven Lakes SPA acreage retention.
The company said it had designed its 2013 program to refine and de-risk the drill prospects on EP417 ahead of an intended drilling campaign to target Valhalla and Yulleroo style prospects in 2014.
Its primary initial drill targets will be large conventional structures similar to Valhalla and Yulleroo in style.
New Standard anticipates the program will also ensure the most prospective acreage is retained across the Seven Lakes SPA acreage position leading to the application to convert the acreage into a granted exploration permit in the coming months.
New Standard will remain as operator of both acreage holdings following the transaction.