Key: Binding terms agreed for Perth Basin transaction By Martin Kovacs, 30 Jun 2017

Key Petroleum has advised that, via its wholly owned subsidiary Key Petroleum (Australia), it has agreed binding terms for the acquisition of AWE’s 100% interest in L7 (R1) in the onshore Western Australian Perth Basin, together with an option for AWE to farm-in to 50% of Key’s 40% interest in WA-481-P in the offshore Perth Basin.

Key advised that the terms of the L7 acquisition include an upfront payment to Key of $0.38 MM, and up to $1.9 MM to be made available for reimbursement to Key for rehabilitation cost, with Key Australia to assume operatorship and all liabilities associated post-completion of the transaction.

The WA-481-P option agreement is exercisable at any time for a period of 12 months from the date of execution of the agreement, Key stated, with AWE to pay a $75,000 option fee to Key and to be granted access to all WA-481-P data.

Key advised that the 12-month option is for AWE to earn a 20% interest in WA-481-P by farming in to its current 40% holding, and should AWE exercise its option, it will then carry Key in its remaining equity or reimburse for up to $0.15 MM for the year-five work program and up to $0.1 MM for the year-six work program.

“Key is delighted to have entered into this transaction with AWE and is very much looking forward to working with them going forward,” Key Managing Director Kane Marshall commented. “This transaction will expand Key’s Australian portfolio of assets, including lower-risk oil prospects in the Perth Basin, with no immediate work program, proven oil reserves and infrastructure lying adjacent to the mapped prospects we have in EP 437 and the upcoming Wye Knot-1 drilling program.

“Any discoveries in EP 437 and/or L7 could potentially be fast-tracked to development via the Mount Horner infrastructure in conjunction with the possible reactivation of Mount Horner oil production, subject to regulatory and government approvals.

“This transaction could also facilitate the participation of AWE in WA-481-P, bringing a high level of expertise in the Permian to the joint venture, with their success in the Waitisia onshore discovery and their geological insights in the Houtman Sub-basin located offshore to the north of WA-481-P.”