PRB Farmout Completed
The joint venture ("JV") participants will acquire a 39% working interest ("WI") for approximately US$111,000 (representing past expenditure incurred by Eon in securing the lease, permitting of the well and carrying out preliminary site-works). Eon will retain a majority 61% WI (53% net revenue interest) and through its US subsidiary, will be the operator of the well, with the JV participants each contributing to ongoing costs, including drilling and completion costs, in proportion to their respective working interest.
The Board has sought independent advice in relation to the funding of the drilling activities through a joint venture structure and, following a competitive sales process, it is satisfied that the sale of a minority interest in Govt Kaehne #9-29 well will provide the best outcome for shareholders. This will de-risk the development program for Eon as well as ensuring it has sufficient capital resources to drill and complete the first Powder River Basin well.
As experienced investors, the JV partners are well-versed in the drilling of oil and gas wells, from potential risks to the rewards reaped. Confident in the success of this well, the Company's Chairman, Matt McCann and Managing Director, John Whisler (who are not associated with the other minority JV participants) have agreed to acquire a 10% and 3% WI respectively in the well. There are a further six (6) unrelated minority JV partners who are participating directly in drilling of the well.
The independent members of the Board have satisfied themselves that, as a result of the independent advice (referred to above) and as evidenced by the fact that there are six other non-related parties participating as JV partners on the same terms and conditions which are considered to be industry standard terms for a transaction of this nature, the transaction is on arm's length terms so that shareholder approval is not required under Chapter 2E of the Corporations Act 2001. ASX has confirmed that shareholder approval is not required under Listing Rule 10.1 for the collective 13% WI being acquired through entities controlled by Messrs. McCann and Whisler.
"Matt McCann and I are delighted to be able to participate directly in the drilling of the Company's first well within our expansive PRB acreage," said John Whisler, Managing Director. "This is a material commitment that we have made in the Company and demonstrates our confidence in the long-term potential for this well."
With funding arrangements finalized and the drill pad and access road complete, the site is now ready to commence operations. When the Capstar #312 rig completes its current drilling commitments, it will be mobilized to site to commence drilling the 9-29 well.
About EON NRG Ltd
EON NRG Ltd (ASX:E2E) is an USA onshore focused energy exploration and production company. The Company's growth path is through drilling of high impact oil exploration wells, supported by its 100% owned and operated long life oil and gas production assets and associated cashflow. The company also has a battery minerals division with prospective leases in Nevada which are at the early stages of low-cost exploration.
EON NRG Ltd