Australia’s Melbana Energy has divested its 55% interest in two non-core offshore exploration permits, AC/P50 and AC/P51 in North-West Australia’s Vulcan Sub-basin, to Rouge Rock.
Melbana has executed binding agreements with Rouge Rock for the disposal of its wholly owned subsidiary Vulcan Exploration that holds these permits.
Rouge Rock currently owns a 45% participating interest in these permits.
Melbana Energy CEO Robert Zammit said: “While we consider the AC permits to be prospective, we believe it’s in the interest of our shareholders that we focus our financial and human resources on leveraging our strategic position in the Cuban energy sector and our high-impact Beehive Australian acreage.
“I am pleased that we have been able to maintain exposure to the upside in the event of a successful farmout or cash sale of the Permits by Rouge Rock.”
The proposed divestment will enable Melbana to further focus its resources on its high-impact Cuban and Australian assets ahead of expected increase in activity levels.
Additionally, the divestment will allow Melbana to avoid exposure to future costs at the offshore blocks given that the forward work programme for the current permit year consists of geological and geophysical studies including interpretation and mapping of reprocessed inversion seismic data with an approximate total cost of A$500,000 ($364,557).
Additionally, the next permit year, commencing on 19 May 2019, comprises an exploration well in each permit.
According to Melbana, the deal has been structured in such as a way that if Rouge Rock enters an arrangement in future for cash, Melbana earns 10% of the cash benefit received by Rouge Rock.
In case Rouge Rock comes to an arrangement in future that provides for a full or partial carry on a well, Melbana gets the right to back-in for a 5% interest after the well is drilled. This offers a carried interest during the drilling process while helping Melbana to avoid costs associated with the drilling process.