MEO Australia has signed an agreement to assign its 50% stake in the WA-454-P exploration permit in the Bonaparte Gulf in offshore northern Australia to Origin Energy Resources.
The agreement will include provisions to back-date the assignment to December last year as consideration for MEO’s stake.
The move would allow the company to avoid all expenditure associated with WA-454-P for this year and next in case an exploration well is obligated to be drilled and substantial expenditure incurred.
The company decided to assign its interest after consideration of its strategic focus and allocation of capital to its asset portfolio.
MEO sought an additional partner for the permit, but could not find any due to the existing depressed farm-out market.
The company looked for additional partner in a bid to minimise its remaining exposure to overall exploration and drilling costs.
MEO determined that the WA-454-P permit no longer had a profile that matched its objectives and decided to assign its stake.
In 2013-14, the company received A$5.6m ($4.2m) from Origin from the original farm-out agreement for the permit.
Upon completion of the assignment, Origin will have a 100% interest in the permit.
MEO Australia managing director and CEO Peter Stickland said: "While it is disappointing to walk away from WA-454-P, the company believes this is the most appropriate course of action given current cash reserves and macroeconomic factors.
"The exploration savings from the withdrawal enables MEO to focus on its lower cost and higher priority project, Block 9, onshore Cuba."