erm farm-in

Hi all,

Given we are now 12 months down the track within a 3 year agreement, I thought I would just refresh memories on the ERM Power (ASX: EPW) deal.

Announcement dated 04 July 2012:

Details of Transaction

Red Sky, its joint venture partner Clarence Moreton Resources Pty Limited (“CMR”) and ERM Gas have executed a term sheet for this transaction.
? ERM Gas will fund and implement up to nine wells (a minimum of six wells) across PEL 478, 479 and 457. In return ERM Gas can earn up to 80% in PEL 478, 60% in PEL 479 and 60% in PEL 457. ERM Gas will be operator.
? ERM Gas will initially be assigned a 10% interest in each of PEL 479 and 457, by paying Red Sky $700,000 upon transfer of interest. Red Sky will retain a 20% interest. ERM Gas will also be assigned further interests in the permits from CMR in return for cash payments to them.
? ERM Gas will pay Red Sky $1 million upon renewal of PEL 479 and an additional $1 million upon renewal of PEL 457.
? Red Sky will place 150 million shares to ERM Gas at a share price equal to the VWAP for the 5 days preceding the execution date of this term sheet. As a result, ERM Gas’s shareholding in Red Sky will be approximately 9.5%.
? Of the above placement amount, 70% will be set aside to fund Red Sky’s 20% of expenditure on work programs in PEL 479 and 457.
? ERM Gas has the option over the next three years to purchase Red Sky’s 20% interest in PEL 479 and 457 for $5 million each – a total of $10 million.
? The transaction is conditional upon Red Sky shareholder approval and Board approval and further due diligence by ERM.
? The current farm-in agreement between Red Sky and CMR will be terminated and replaced with a tripartite farm-in agreement.

END

Note the following observation:

Announcement dated 13 September 2012 for the "completion" of the deal states the same transaction detail as above.

Interestingly, the announcement on 17 May 2013 for achievement of ERM transaction milestone states:

"Under the transaction agreement, ERM Gas will make payments to Red Sky of up to $2.7 million, upon achievement of certain milestones, and will fund the drilling of up to six wells (minimum of four) at Red Sky’s Clarence Moreton Basin project area, in permits PEL 479 and 457.

So has PEL 478 been ditched or has RG just chosen to leave it out of this announcement?

Either way, ERM has two years left to drill the agreed wells. No time like the present I say. On with the drilling...........

Maybe ERM needs a tap on the shoulder. Lilac, can you give the St Bakers' a nudge for us unfortunate ROG shareholders.

Gaspew ;)