Australian oil and gas producer, Mosaic Oil NL has entered into a farm-in agreement with Discovery Geo Corporation, Tamark Pty Ltd and CG Operating, Inc (Farmors) to earn a 40% interest in ATP 1056P, located on the prospective southeast Cooper oil fairway in southwest Queensland.

Under the terms of this farm-in agreement, Mosaic will be assuming the Operatorship from the original permit applicant, US-based, Discovery Geo Corporation and will fund 50% of the cost of 600 square kilometres of 3D seismic and 50% of the drilling of ten exploration wells.

The total consideration for the farm-in is approximately A$16 million, consisting of an upfront payment of A$2.7 million, issue of 45 million MOS shares (under voluntary escrow), plus a capped payment of the carrying of a portion of the Farmors capital costs and production bonus of A$6.25 million, which is contingent on future oil sales.

'The block, which we have internally named 'Taipan', is highly prospective and, upon success, is expected to provide a substantial re-rating for the Company, as it has done for those who have found oil in the western Cooper-Eromanga Basin,' said Mosaic CEO Alex Parks.

This farm-in provides Mosaic with exposure to a highly prospective oil play, analogous to that currently being successfully explored and developed by Beach Energy, Victoria Petroleum, Cooper Energy and Stuart Petroleum on the western Cooper margin in South Australia.

Tags: Mosaic Oil NL