Hartshead Resources has signed an agreement with Viaro Energy, a subsidiary of UK-based oil and gas company RockRose Energy, to farm-out 60% of its production licence P2607.
Located in the Southern Gas Basin of the UK Continental Shelf, P2607 contains five blocks in Quads 48 and 49 and contains multiple gas fields.
Under the terms of the farm-out agreement (FOA), Hartshead will receive a total consideration of about A$196.3m ($131.4m), which includes a part of its share of development costs.
The company will also receive bonus milestone payments and the UK government Investment and Capital Allowance of $48.4m.
Upon completion of the transaction, which is subject to government approval, the joint-venture partners will sign a joint operating agreement (JOA).
The FOA is a major milestone for the company, materially de-risking the project and providing a clear pathway to the full financing and subsequent development.
Hartshead CEO Chris Lewis said: “The successful execution of a farm-out agreement with RockRose materially de-risks the Phase I development of the Anning and Somerville gas fields by securing over $536m of gross project expenditure, provides technical and commercial validation of our gas development and implies a material uplift in value for the project.
“This is a landmark transaction for Hartshead shareholders. I am delighted to welcome RockRose to the P2607 Joint Venture and I am looking forward to working with the team as we progress the Phase 1 development and other opportunities in the License.
“We are also very pleased to welcome new domestic and international investors to the Company and are very pleased with the level of support shown during the Placement process.”
In addition to the FOA, Hartshead has received firm commitments for a placement to raise A$20m through the issue of 501 million shares at a price of $0.04 per share.
The placement received support from new and existing institutional investors, and the company’s directors agreed to subscribe for 18.75 million shares to raise an additional $750,000.
The proceeds from the placement, together with the farm-out proceeds are expected to keep Hartshead fully funded through its share of non-debt project development costs.
The farm-out of PL P2607 and Placement will materially de-risk its path to FID for Phase 1 of the project, said Hartshead Resources.
