Ann: TEG: Triangle Signs Farmout at Mt Horner, page-2

Just the start IMO...
" L7 ONSHORE PERTH BASIN FARMOUT TO
TRIANGLE ENERGY (GLOBAL) LIMITED
Key Petroleum Limited is pleased to advise that a Farmout Agreement has been executed between Key Petroleum
(Australia) Pty Ltd (“Key”, a wholly owned subsidiary of Key Petroleum Limited, and ACN 008 939 080 Pty Ltd (“TS”,
a wholly owned subsidiary of Triangle Energy (Global) Limited (“Triangle”; ASX: TEG) and Triangle as guarantor of
TS’ obligations.
The Farmout Agreement is conditional on the usual regulatory approvals and the consent of a landholder under an
existing compensation agreement. Under the terms of the Farmout Agreement:
• A Joint Venture approved Early Work Program (“Early Work Program” will be conducted which will include
the workover of two of the existing wells at the Mount Horner Oil Field, whereby Triangle and Key are each to
contribute 50% of all associated costs;
• Triangle will fund 100% of a Work Program (“Farmin Programme” consisting of two new wells and the
acquisition of 3D seismic to a capped amount of US$3 million (approximately AU$4.1 million) (“Farmin Limit”;
• Triangle will earn a 50% interest in L7 upon the first to occur of the completion of Farmin Programme and the
expenditure on that Programme of the Farmin Limit (“Earning Point”;
• Triangle has the right to cost recover out of oil production on a staged basis, the expenditure it incurred on the
Farmin Programme up to the Earning Point;
• Key will initially be the Operator for the Joint Venture for both the Early Work Program and the Farmin
Programme; and
• Triangle retains the option of assuming Operatorship of L7after the Earning Point is achieved.
Technical work undertaken to date, in conjunction with Triangle, is well advanced with Key recently consulting
oilfield and rig contractors and completing preparation to relocate equipment to the Mount Horner site in
anticipation of commencing operations upon grant of regulatory approvals. Rehabilitation, abandonment,
workovers and the drilling of new wells is expected to occur sequentially resulting in a significant cost saving to the
L7 Joint Venture. Rehabilitation operations are expected to commence in the coming months with the timing of the
workover and drilling programs to commence early in 2019, subject to regulatory approvals. The workover program
is expected to be low cost and of a short duration to establish the presence of any economic oil from two e xisting
wells of the five remaining in the Mount Horner Oil Field.
Near field exploration and development opportunities both within the Jurassic reservoir, which contains the Mount
Horner Oilfield, and in the Permian and Triassic level objectives up-dip from theWaitsia Gas Field will be significantly
de-risked through the acquisition of 3D seismic.