CARNARVON Hibiscus, a wholly owned subsidiary of Malaysia-based Hibiscus Petroleum Group, has wholly acquired the permit containing the West Seahorse oilfield for US$14.05 million.

The company had signed a series of agreements with 3D Oil in July, giving it an option given to acquire the 43.83 per cent stake in the field which it did not own for “fair market value”.

In a letter to shareholders released in July, 3D Oil managing director Noel Newell wrote that while his company had placed a strong focus on developing the project, it had been unable to achieve an appropriate financing solution for the project, in its current form.

“This was the turning point in the company’s ability to participate in the development of West Seahorse, and resulted in a negotiation with our joint venture partners, Hibiscus,” he wrote.

“It is worth noting that any funding package would have required a significant equity component, which would have resulted in the Company having to raise in the order of (between $40 million and $50 million) of new equity capital to fund its 49.9% share of the West Seahorse development.”

The transaction, Mr Newell wrote, offered 3D Oil a way forward which delivered tangible value from West Seahorse as well as strengthening its financial position, while avoiding a dilutive share issue.

The project has already been granted Major Project Facilitation status from the Federal Government, allowing project developers access to Federal Government assistance.

Minister for Infrastructure and Regional Development Warren Truss said in an announcement that the plan of drilling two producing wells through a mobile offshore production unit would create 100 new construction jobs off the Gippsland coast.

“This is the type of private sector investment we are encouraging to boost Australia’s economy and we are playing our part by coordinating and facilitating the various Commonwealth approvals needed,” he said.

The sale will depend on the relevant approvals being obtained from Australia’s National Offshore Petroleum Titles Administration (NOPTA).

Should these be received, 3D Oil will have no further obligations to or claims over the permit, though it will remain a participant in the neighbouring VIC/P57 permit, in which Carnarvon Hibiscus also holds a stake.

The July deals signed between the companies also saw Carnarvon Hibiscus increase its stake in the Vic/P57 permit area by 5% to 55.1% and acquire 3D Oil’s 49.9% share of the Britannia rig – paying US$7.5 million in total for both.

3D Oil will retain an interest of either 24.9% or 44.9% in the Vic/P57 permit dependent on whether HiRex (a joint venture between Hibiscus and Rex Vertical Drilling) exercises its option to take a 20% stake in the permit.

If HiRex take up the offer, the project will be able to use Rex Virtual Drilling’s technology in the drilling of the Sea Lion commitment well – which 3D Oil’s US$7.5 million payout from the stake and rig sale will be used to fund.