311108 Central Petroleum Limited (Central - ASX ticker CTP) and...

311108 Central Petroleum Limited (Central - ASX ticker CTP) and Petroleum Exploration Australia Limited (PXA) Joint Venture
Central has been advised by the previous directors of Petroleum Exploration Australia Limited (PXA), its broadacre joint venture partner, of the terms of the recent acquisition by QGC (Exploration) Limited (QGC) of PXA in a two stage payout. {British Gas – BG, has recently succeeded in their bid to take over QGC, the parent company of QGC (Exploration) Pty Ltd.}
The terms of the acquisition of PXA by QGC include the payment of $4.8 million, representing outstanding cash calls previously made (plus related interest) relevant to the broadacre Joint Venture (between Central and various subsidiary Companies and PXA) as well as $13.5 million, representing a total gross payout of over $18 million. Certain sundry debts will be deducted prior to making a final payment to the shareholders of PXA, and the final payment is also subject to proof of registration of the up to 20% interest in Central’s acreage interests to be retained by PXA under the terms of the Joint Venture. PXA has received $8.5 million to date.
Martin Place Securities, the prime mover behind PXA, has estimated that the final payout per share of the 63,029,001 shares of PXA will be c. $0.18 per share after all costs and debts have been settled.
For PXA to retain up to a 20% interest in all of Central’s operated permits, the group are to fund 40% of the first $3 million seismic works and 40% of the first 3 wells in each permit subject to the grant of the permit concerned. (2:1 “promote”). Average well costs for conventional drilling to date in the Joint Venture have been c.$5.5 million each inclusive of mob, demob and road building. The Joint Venture also recognises that each $2 million increment of expenditure on non-conventional drilling such as Coal Bed Methane (CBM) or other non-conventional play types restricted to a 1,000m depth qualification will count as 1 well in the 3 wells plus seismic works required to retain the 20% interest in each permit.
Central operates 9 granted permits and 19 permit applications. If all of the permits were to be granted, the Joint Venture continues to the 20% retention level in each of them and each well cost an average of $4 million, then the cumulative expenditure required by PXA to retain a 20% interest would be 40% of $420 million or c. $170 million.
(Note : it is not compulsory for PXA to expend sufficiently to retain a 20% interest in each permit; they may, subject to certain caveats, retain either a 6 and 2/3 interest {1 well plus seismic works} or a 13 and 1/3 interest in each permit {2 wells plus seismic works}. Further, it can not be assumed that all of the permit applications will be granted)