Highlights:

• JV partners Hartshead and Viaro Energy’s subsidiary RockRose have negotiated the option for Hartshead to divest an additional 20% licence interest for an uncapped free carry provided by RockRose, covering the total costs of the Phase 1 project development (Financing Backstop).
• Existing farm-out agreements amended, providing security of funding for 100% of Phase 1 project development costs.
• Following Final Investment Decision (FID), Hartshead will have the option to exercise the Financing Backstop at the point that the current RockRose carry for Phase 1 has been fully expended.
• Exercising the Financing Backstop would increase the total committed project funding to over A$800 million.
• Hartshead maintains the flexibility to retain its 40% interest and select alternative funding.
• Existing Phase 1 cash bonus has been converted and increases to an additional A$54.7m in work programme carry in the event Hartshead retains its 40% interest.
• The JV continues to make good progress on the development and towards FID.
• Phase 2 bonuses of A$9.0 million cash remain.

Hartshead Resources and UK North Sea independent Viaro Energy today announced that their respective wholly owned subsidiaries, Hartshead Resource Ltd (HRL) and RockRose Energy (RockRose), have agreed amendments to the Farm-out Agreement (FOA) and Joint Operating Agreement (JOA), providing Hartshead with an option to divest an additional 20% equity interest in its UK Southern Gas Basin License P2607, in return for an uncapped free carry of all gross costs for the Phase 1 project development (Financing Backstop). The Financing Backstop may be exercised after Final Investment Decision has been taken and upon full expenditure of the current RockRose carry for Phase 1 project development costs.

Chris Lewis, Hartshead CEO, commented:
“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. Hartshead is in a unique position as it has the added ability of being able to retain its 40% interest via alternative financing whilst ensuring it is now able to progress to take Final Investment Decision and progress towards project development, now that it has a Financing Backstop provided.

The Joint Venture team between Hartshead and RockRose has integrated exceptionally well over the last few months and I would like to personally thank RockRose for their support in the Joint Venture on licence P2607 and the significant progression of the Phase 1 development."

Francesco Mazzagatti, CEO of Viaro Energy, commented:
“I am quite pleased with the restructuring of our original farmin agreement with Hartshead, as it provides us with complete certainty that the development of Anning and Somerville will be fully funded to completion. Giving our partner the option of a financing backstop ensures stability for the JV, a particular challenge for North Sea operators nowadays with the shrinking pool of traditional capital providers for E&P opportunities. With the amendments in place, we can now confidently proceed to the FID. I am grateful to the Hartshead team for a smooth and seamless cooperation at every stage of our developing partnership.”

KeyFacts Energy: Hartshead UK country profile   l   Viaro Energy UK country profile