Empire Oil & Gas NL says that its wholly owned subsidiary Empire Oil Company (WA) Limited has executed a basin wide farmout of all of its exploration permits in the onshore Perth Basin with ERM Gas Pty Ltd. ERM Gas Pty Ltd (”ERMG”) is a wholly owned subsidiary of Australia’s leading gas-fired power generation developer, ERM Power.

ERMG will earn varying interests in Exploration Permits EP-389, EP-416, EP-426, EP-430, EP-432, EP-440 and EP-454 all in the onshore Perth Basin by contributing to the exploration programme described below.

ERMG will contribute 33-1/3% of the costs of drilling the Moriary-1 exploration well to earn a 25% interest in EP-426.

ERMG will contribute 32.0% of the costs of acquiring the Gingin West 3D Seismic Survey to earn a 12.5% interest in EP-389. ERMG will have the option to increase its interest in EP-389 to 30.0% by contributing 32.0% of the cost of drilling the Gingin West-1 exploration well.

ERMG will contribute 30.0% of the costs of acquiring the Mullering 3D Seismic Survey to earn a 12.5% interest in EP-432. ERMG will have the option to increase its interest in EP-432 to 25.0% by contributing 30.0% of the cost of drilling one exploration well in EP-432.

ERMG will pay to Empire the sum of $70,000 to earn a 5.0% interest in EP-416 contributing to the Wellesley 2D Seismic Survey.

ERMG will contribute 100.0% of the costs of reprocessing and interpreting the existing seismic data in exploration permits EP-430, EP-440 and EP-454 to earn a 12.5% interest in each of these permits. ERMG will have the option to increase their interests in EP-430, EP-440 and EP-454 to 50.0% by contributing 100.0% of the cost of acquiring 2D seismic surveys in each of the permits including the approval costs for these surveys.

Under the terms of the Farmin Agreement, ERMG is to make two initial payments to Empire. The first payment of $1.05 million is due upon approval of the AFE’s for the drilling of Moriary-1 and the acquisition of the three seismic surveys. The second payment of $1.05 million is to be made on or before 4th April 2008. (The final farmin costs of these programmes will be adjusted according to the final approval of actual programme costs). Upon making these payments, then ERMG will have the right to earn varying interests in the Coal Seam Gas rights in all of the Permits by contributing to a $5.5 million exploration programme designed by ERMG to explore for coal seam gas reserves in the Permits. The Coal Seam interest in each of the Permits will vary depending on whether existing joint venture participants wish to contribute to the coal seam exploration programme. In Exploration Permits EP-430, EP-440 and EP-454 where Empire currently has 100%, ERMG will earn a 75% interest in the Coal Seam Gas rights.

As a result of this Farmin Agreement with ERMG, Empire is pleased to announce that the three seismic surveys in EP-389, EP-416 and EP-432 are now fully funded by farminees and are planned to be acquired during March-April, 2008; and the Moriary-1 well is now 80% funded by farminees and is planned to be drilled during January-February, 2008.

Tags: Empire Oil & Gas NL