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Statoil to invest $210 million to enter Australian shale gas

Statoil and PetroFrontier signed deal on Southern Georgina Basin 

Statoil ASA (Statoil) from Norway and PetroFrontier Corp. (PetroFrontier) from Canada have signed a binding “Farm-in Agreement” to farm into shale gas PetroFrontier’s four exploration permits (EPs) and two exploration permit applications (EPAs) in the Southern Georgina Basin, Northern Territory, Australia.

In this Farm-in-Agreement, Statoil will be the Farmor and PetroFrontier the Farmee (see definitions in glossary)

Statoil and Petrofrontier shale gas Farm-in-Agreement will be implemented in three phases through a joint venture covering the four existing Exploration Permits in EP 103, EP 104, EP 127 and EP 128 (EPs) and in EPA 213 and EPA 252 (EPAs).

Through these three phases, Petrofrontier will operate the first phase of the programme while Statoil has secured options to operate from the second exploration phase in addition to increase ownership interests from 25 to 65% of Petrofrontier‘s interests.

Phase 1 consists of:

 – a joint exploration program of requiring $50.0 million capital expenditure

 – the current drilling and fracturing program

 – Statoil to have the option to take 25% working interest of PetroFrontiers’ EPs and EPA

 – operations driven by PetroFrontier to be completed in 2013.

Phase 2 will conduct:

 – a further joint exploration program of $100 capital expenditure

 – Statoil to become the operator if exercising corresponding option of the Farm-in-Agreement

 – Statoil to take an additional 25% of PetroFrontier’s working interest in all of the EPs and EPAs by 2015

Phase 3 shall help:

 – a further joint exploration program of $80 capital expenditure

 – Statoil to take the wheel as operator

 – Statoil to acquire an additional 15% of PetroFrontier’s working interest in all of the EPs and EPAs.

At that date Statoil and PetroFrontier will share future costs based on their respective ownership percentages.

At the end of Phase 3 in 2016 and assuming that the shale gas Farm-in-Agreement has been implemented according to plans, Statoil will have completed its 65% of interest in the EPs and EPAs in investing $210 million capital expenditures.

PetroFrontier in brief

Headquartered in Calgary, Alberta, PetroFrontier is a Canadian company with international oil and gas exploration and production of conventional and unconventional onshore petroleum fields in Australia’s Southern Georgina Basin.

Petrofrontier is listed on the Toronto Stock Exchange and  holds a 75-100% interest in the four Georgina exploration permits EP 103,104,127 and 128, in addition to pending exploration permits.

Founded in 2009, PetroFrontier is one of the first companies to undertake onshore exploration in the Southern Georgina Basin in Australia’s Northern Territory.

PetroFrontier’s Australian office is based in Adelaide, South Australia.

Statoil in brief

Statoil is a NOC, approximately 70% owned by the Norwegian government.

Statoil is an international technology-oriented energy company focused on upstream oil and gas operations and currently produces 1.85 million b/d BOE.

Statoil has operations in 36 countries.

Building on 40 years of experience from oil and gas production on the Norwegian continental shelf (NCS), Statoil is committed to applying technology and creating innovative business solutions with the contribution of approx. 21,000 employees worldwide.

Statoil’s shares are listed on both the Oslo Bors and the New York Stock Exchange with a market capitalization of approximately $75 billion

Statoil is an oil and gas company operating mainly in offshore and arctic conditions with a long standing experience in sub-sea and offshore technologies

This  acquisition of working interests in Southern Georgina Basin through PetroFrontier gives Statoil the opportunity to enter the shale gas exploration and production at the earliest days to learn about unconventional hydrocarbures at low costs and low risks.

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