Falcon Oil & Gas Ltd., Denver, has approved binding agreements with PetroHunter Energy Corp. to acquire shares in two PetroHunter projects in the US and Australia.
Falcon will pay $7 million for a 25% working interest in five wells in PetroHunter’s 20,000-acre Buckskin Mesa unconventional gas project in Colorado’s Piceance basin.
The funds will be used to complete and test the wells, and if testing is successful, Falcon has the option to acquire an additional 25% working interest in the wells and a 50% working interest in the overall Buckskin Mesa project.
The Buckskin Mesa option requires Falcon to pay an additional $18 million in spending commitments for a drilling and development program, and $25 million in cash or convertible Falcon shares. In addition, Falcon would have an option to become operator of the Buckskin Mesa project, in which case it would pay an additional $3.5 million in cash or securities convertible into Falcon shares.
Beetaloo basin
The second agreement is to acquire a 50% working interest in PetroHunter’s 7-million-acre Beetaloo basin prospect in Northern Territory, Australia, for $5 million in cash and $20 million of securities convertible into Falcon shares.
PetroHunter will remain operator of the Beetaloo basin (see map, OGJ, June 27, 1994, p. 60).
The agreements, however, provide for a joint operating committee and direct involvement by Falcon managerial, technical, and financial personnel.
The transactions are subject to closing conditions and regulatory approvals, and the Buckskin Mesa transaction is subject to settlement of an outstanding PetroHunter litigation regarding the Buckskin Mesa project.
Because Marc A. Bruner, Falcon’s chairman, chief executive, and president, is a major PetroHunter shareholder, the Falcon board formed a committee of independent directors to evaluate and approve the transactions.
Buckskin Mesa is in Rio Blanco County 5 miles west of Meeker, Colo.
