PetroFrontier (PFC-V) changes Southern Georgina farm-in - Dino's keep track list.
www.petrofrontier.com
June 11, 2013 - News Release
PetroFrontier Corp. has agreed to amend the existing farm-in agreement with Statoil Australia Oil & Gas AS whereby Statoil has committed to spend the next $50-million (U.S.) throughout the remainder of 2013 and 2014 to fully finance up to a 385-kilometre 2-D seismic program, and the drilling and stimulation of four to six vertical test wells. Throughout 2012 and the first half of 2013, PetroFrontier and Statoil jointly spent approximately $30-million (U.S.) on exploration in the Southern Georgina basin, thereby gaining valuable geological information. Under the amended farm-in agreement, Statoil could spend a total of up to $175-million (U.S.) by the end of 2016 before PetroFrontier will be required to contribute further. Statoil will also become the operator effective Sept. 1, 2013.
"We have worked with our financial adviser, GMP Securities L.P., over the past five months reviewing various strategic opportunities and feel that we have reached a transaction best representing the interests of our shareholders," said Paul Bennett, president and chief executive officer of PetroFrontier. "We are very pleased that Statoil is clearly interested in the exploration of the Southern Georgina basin. Its commitment to further explore the basin is a very positive indication of their belief in the prospectivity of the area. In addition, while retaining a significant working interest, we eliminate our $10-million (U.S.) capital commitment and our need to raise additional financing."
"We believe the Southern Georgina basin asset to be potentially very prospective and we are happy to assume operatorship for this 14-million-acre area. This deal is in line with our exploration strategy where we pursue access early and at scale to derisk the plays and grow organically through exploration activities. We will continue the good work done by PetroFrontier with the aim of clarifying the prospectivity," said vice-president Vidar Skjaeveland, in Statoil's onshore exploration unit.
With working capital of approximately $11.3-million at March 31, 2013, no debt and reduced operating expenses going forward, as a result of the amended farm-in agreement, PetroFrontier is now positioned for new growth opportunities.
Under the terms of the amended farm-in agreement, up to the next $160-million (U.S.) of exploration costs will be fully financed by Statoil over three phases to the end of 2016, in return for 80 per cent of PetroFrontier's working interest in EP 103/EP 104 (100-per-cent working interest), EP 127/EP 128 (75-per-cent working interest) and EPA 213/EPA 252 (100-per-cent working interest) in the Southern Georgina basin, Northern Territory, Australia.
- Phase 1 and 2A (2013 and 2014):
- Statoil will spend the next $50-million (U.S.) on exploration (PetroFrontier -- nil) and assume operatorship on Sept. 1, 2013;
- At the end of phase 2A, Statoil will have the option to continue to phase 2B; if Statoil elects not to continue, it must return to PetroFrontier 50 per cent of its former working interest in the permits, such that ownership will then be: Statoil (30 per cent), PetroFrontier (70 per cent);
- Phase 2B (2015):
- Upon proceeding to phase 2B, Statoil will spend the next $30-million (U.S.) on exploration (PetroFrontier -- nil);
- At the end of phase 2B, Statoil will have the option to continue to phase 3; if Statoil elects not to continue to phase 3, then it must return to PetroFrontier 25 per cent of its former working interest in the permits, such that ownership will then be Statoil (55 per cent), PetroFrontier (45 per cent);
- Phase 3 (2016):
- Upon proceeding to phase 3, Statoil will spend the next $80-million (U.S.) on exploration (PetroFrontier -- nil);
- At the end of phase 3, Statoil will own 80 per cent and PetroFrontier will own 20 per cent of PetroFrontier's former working interest in the permits.
At the end of phase 3, Statoil will have completed its financing obligations under the amended farm-in agreement and the sharing of future costs between Statoil and PetroFrontier will be based on their then respective ownership interests.
These amendments are subject to satisfaction of certain conditions precedent, including the approval of the Foreign Investment Review Board of Australia and the approval of the TSX Venture Exchange. Upon satisfaction of the conditions precedent (expected to be satisfied on or before July 1, 2013), PetroFrontier's strategic review process announced on Dec. 4, 2012, will have been successfully completed.
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