Mosaic Oil NL has entered into farm-in agreements for various SW Surat Basin joint ventures operated by Bow Energy (Bow). The farm-in blocks cover a significant part of the Jurassic Boxvale Sandstone oil exploration trend in the south-western Surat Basin and cover an area of approximately 4,000 square kilometres.

The agreements are designed as multi-stage farm-ins with firm and option wells. In the first stage Mosaic will fund 70% of a $640,000 2D infill seismic acquisition program and 35% of a 20 km seismic reprocessing program, to earn the option to fund 46.667% of a well in the Stratton Block of ATP 608P to earn 35% equity in the Block.

Mosaic then has the option to elect to enter a second stage farmin by funding 100% of the cost of 300 km additional seismic reprocessing in other Bow tenements in the southwest Surat Basin to earn the option to fund:

• 70% of the costs of a well in Rookwood Block of ATP 608P (excluding Rookwood Oil Field) to earn 35% equity in that Block, and • 100% of the costs of a well in each of ATP 664P, ATP 706P, ATP 807P Western Blocks and ATP 805P Southern Blocks to earn 50% equity in each tenement drilled.

Mosaic will fund either 35% (Rookwood Block) or 50% (other second stage farmin blocks) of any additional pre-drill seismic acquisition and/or seismic reprocessing that may require to mature the second stage farmin well prospect(s).

An agreed exclusion area around the Donga and Rookwood Oil Fields are not included in the agreements.

In a separate agreement, Bow has agreed to fund 50% of the Jawsone-1 well to earn 25% in Mosaic’s PL 15 Farm-out Block in the Surat-Bowen Basin. Mosaic will fund the remaining 50% of Jawsone-1 and retain 75% interest in the PL 15 Farm-out Block. Jawsone-1 is currently planned for drilling as part of Mosaic's accelerated drilling program in August-September 2008.

Mosaic will operate the Bow farmin program and continue as operator in all tenements where it earns equity.

Mosaic Oil’s Managing Director Mr Lan Nguyen said: “This multi-stage farm-in program is consistent with our stated strategy of looking for new opportunities which may benefit from our exploration, infrastructure and operational strengths in the Western Surat-Bowen Basin”.

“The firm and options agreement with Bow-operated joint ventures will provide Mosaic Oil with a substantial interest in the Jurassic Boxvale Sandstone oil exploration trend. Success in exploring this oil trend would provide Mosaic revenue diversification from increased oil production in this sustained high oil price environment. This deal could potentially add up to 6 wells to Mosaic’s operated drilling program in the period from 2008 to 2010” Mr Nguyen said.

Tags: Bow Energy Ltd., Mosaic Oil NL, Surat Basin