Hartshead Resources NL has agreed an option to sell a further 20% in its licence P2607, in return for an uncapped free carry of gross costs for phase I project development.
DE-RISKING
The Australian company completed the original 60% farm-out deal in May with Viaro Energy Ltd’s subsidiary, RockRose Energy Ltd.
Three months later it announced it was looking for third-party funding with options including selling further equity in the UK southern North Sea gas licence.
Hartshead today said that the amendment to the deal provided security of funding for 100% of phase I project development costs of the Anning and Somerville gas fields.
The company may exercise the option after a final investment decision and on full expenditure of the current RockRose carry for phase I, which increases total committed project funding to more than A$800 million (£420m).
“The financing backstop via an uncapped carry is a major achievement for the company de-risking the project financing, providing a clear pathway to development and cashflow, and positions HRL [Hartshead] with the option of a fully, debt-free funded remaining project interest,” said the company in a statement
Hartshead has the right to retain its 40% interest and select alternative funding, in which case the converted existing phase I cash bonus increases to an additional A$54.7m (£29m) in work programme carry.
Chief executive officer Chris Lewis added: “The execution of the amendments to the farm-out agreement and joint operating agreement with RockRose, allows us to advance the phase I development of the Anning and Somerville gas fields by securing the option of an uncapped carry for our interest of the project.”
Viaro CEO Francesco Mazzagatti said that the restructuring gave reassurance that the Anning and Somerville development would be fully funded to completion.
“With the amendments in place, we can now confidently proceed to the FID.”