Holloman Energy Executes Cooper Basin Farm-out LOI

Holloman Energy announced the execution of initial farm-out agreements with respect to its Australian Cooper Basin holdings.

In a Letter of Intent dated May 11, 2011, Holloman accepted the terms of a farm-out with an undisclosed party through which that party may earn a 44% working interest in Holloman's PEL 112 and PEL 444 licenses by funding approximately $17,000,000 to $19,000,000 in exploration and development expenditures.

'We are very encouraged by the progress we've made in our farm-out negotiations,' stated Mark Stevenson, Holloman CEO. 'We believe the scope of the commitments we've negotiated are sufficient to provide a strong exploration and development opportunity on our acreage.'

Though Holloman intends to release more details in the upcoming week, it disclosed that the general terms of the farm-out included funding of the costs of 3D seismic acquisition and a multiple well drilling program on each of its licenses.

In connection with the farm-out opportunity, Holloman has also entered into a participation agreement under which all current working interest holders will contribute a portion of their working interest in satisfaction of the 44% working interest, which may be earned by the third party. Holloman anticipates it will retain a 40% working interest in its licenses.

Both the farm-out transaction and the participation agreement are subject to a number of conditions including certain approvals, and the execution of definitive agreements.

Source: Holloman Energy