Ambassador Oil and Gas (ASX: AQO) has entered into a binding Heads of Agreement to farm-out a 70% stake in PEL 570 in the Cooper Basin, South Australia, to Outback Energy Hunter.
The agreement provides for the parties to negotiate a fully termed farm-out agreement under which Outback Energy Hunter will pay for all costs associated with the exploration work program to satisfy the first 5 year term to a maximum of $50 million.
This includes the acquisition of 500 square kilometres of 3D seismic and the drilling of three wells.
Outback Energy Hunter was established by Michael Fowler, former chairman and founding director of Nexus Energy (ASX: NXS); former Shell senior exploration executive Ian Boserio; Vince Rusciano, former director of the Treasury Group; and John Hartwell, a former Head of the Federal Government Department of Resources Energy and Tourism.
In addition, Magnum Hunter Resources Corporation (NYSE: MHR) chief executive officer Gary Evans has agreed to serve in an advisory capacity.
Evans has substantial unconventional onshore shale oil and gas experience having been a pioneer in some of the largest U.S. shale plays in recent years.
PEL 570 is located in the gas prone Patchawarra trough and is prospective for both conventional and unconventional shale gas resources.
Ambassador had previously estimated the permit held in-place gas of up to 20 trillion cubic feet contained in unconventional rock and coal seams.
The gas is relatively low in carbon dioxide, likely water free and has the potential to contain significant quantities of valuable petroleum liquids.
Interest in the Copper Basin’s unconventional gas prospects has increased as operators continue to drill and test successful wells.
A notable example is Chevron’s (NYSE: CVX) US$349 million farm-in to Beach Energy’s (ASX: BPT) Nappamerri Trough permits in the Cooper Basin.
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