Friday 23 April 2021

Melbana Energy Limited (ASX: MAY) (Melbana) is pleased to announce that its wholly owned subsidiary, Finniss Offshore Exploration Pty Ltd (Finniss), has entered into a sale and purchase agreement (SPA) to sell its WA-488-P permit (Permit) to EOG Resources Australia Block WA-488 Pty Ltd (EOG Australia), a wholly owned subsidiary of EOG Resources, Inc. (NYSE: EOG).

Under the terms of the SPA, subject to satisfying certain conditions precedent, EOG Australia will acquire a 100% interest in the Permit, an approximately 700 square km 3D survey and an extensive amount of 2D seismic coverage.

The Conditions Precedent include:

→ various usual regulatory approvals for a transaction of this type;

→ approval to suspend and extend the remaining permit obligations to allow additional time to drill the initial exploration well; and

→ no objection to the proposed acquisition from the Foreign Investment Review Board. EOG Australia intends to drill an exploration well targeting the Beehive Prospect in 2022. Finniss would receive the following payments in consideration for its sale of the Permit:

→ US$7.5 million upon satisfaction of the conditions precedent.

→ US$5.0 million in contingent payments

 50% payable contingent on EOG Australia entering the final year of the exploration permit (the current commitment for which is the drilling of another well)

 50% payable contingent on EOG Australia being awarded a production licence in the Permit.

→ future payments of US$10.0 million for each 25 million barrels of oil equivalent produced, sold and delivered by EOG Australia from the Permit area.