Falcon Oil & Gas Ltd (LON:FOG, CVE:FO) has agreed a further farm-out of its stake in the Beetaloo shale project, in Australia, to partner Origin Energy.
The company is transferring a 7.5% participating interest in the project in return for A$150mln of additional cost cover by its larger partner.
Previously, Origin was committed to spend up to A$65.3mln gross in Stage 2 of the joint venture, and up to A$48mln in Stage 3 – now, the aggregate gross cost cap rises to A$263.8mln.
Spending above A$263.8mln will be borne proportionally by the partners.
Falcon retains a 22.5% interest in the Beetaloo project following the latest farm-out, with Origin owning the other 77.5%.
In a statement, Falcon chief executive Philip O’Quigley noted that the deal shows Origin remains committed to the project.
“This farm down together with Falcon’s unaudited cash reserves of US$11.5 million at 31 March 2020 leaves us well-positioned to participate in the future upside potential of the Beetaloo.
“We look forward to updating the market as soon as operations recommence in the Beetaloo,” he added.
In March, Origin paused operations at the project due to the impacts of the coronavirus.
It is presently expected that the original schedule of fracking will be delayed by at least three months, now occurring in the second half of 2020.
The drilling of the next well, the Velkerri Flank well, will accordingly follow likely in the first half of 2021.