MEO Australia has entered into a binding agreement to farm out half of its Breakwater prospect to Origin Energy near Darwin off the coast of Western Australia.
Under the agreement, MEO's subsidiary Drysdale Offshore Exploration will relinquish 50% of its interest in WA-454-P to Origin, which will become the operator of the project.
In return Origin will reimburse 80% of Drysdale's costs toward the project to date totalling $5.6 million and will also fund 80% of the cost to drill the exploration well.
The untested cost of the well is capped at $35 million, with a mechanism to adjust the cap to exchange rate fluctuations from a one-to-one base. Origin and Drysdale will split extra costs equally.
Chief executive Jürgen Hendrich said MEO plans to defray its 20% cost exposure to the project before drilling commences, opening up the prospect for another player to enter the venture.