As per the terms of the agreement, GBE will fund all Baraka’s exploration obligations up to completion of a well on each of EP 127 and EP 128 to earn a 50% interest in both permits, excluding the area within a 5km radius of the Elkedra-7 well.
Baraka was previously earning a 75% interest in the permits from Northern Territory Oil and believes that the permits are prospective for hydrocarbons due to previous oil shows and the flows of gas in other wells in the basin, the high organic content Arthur Creek source rocks and the good quality reservoir rocks.
Baraka will retain all rights to hydrocarbons in the approximate 75sqkm area surrounding the Elkedra-7 well where previous drilling has indicated oil shows.
As part of the agreement, GBE has also agreed to prepare a resource evaluation report on EP 127 and EP 128 within four months; and commence drilling of the first well on either EP 127 or EP 128 by no later than December 2010. GBE will become operator of both EP 127 and EP 128, subject to all necessary consents.
AEC has advised Baraka that it is of the opinion that the geology of the Southern Georgina Basin is analogous to areas of the Western Canadian sedimentary basin, where its team has extensive exploration experience.
Baraka believes this experience will be a major benefit for the joint venture in the future. AEC plans to complete seismic and a multi-well drilling program in the Georgina Basin across permits EP 103, EP 104, EP 127 and EP 128 later this year.
Following completion of the farm out, Baraka will continue to explore the 75% controlled Elkedra-7 area and assess further opportunities in the oil and gas sector.
