Romania: Beach Farms Into Melrose's Est Cobalcescu Block

Australian-listed Beach Energy is to take a 30 per cent stake in Melrose Resources' Est Cobalcescu Block in Romania, following an agreement announced today.

The agreement will see Beach enter into a partnership with Scottish operator Melrose and the other current partner in the Est Cobalcescu joint venture, South Africa's Petromar Resources. Following the division of the shares, Melrose Resources will retain its operatorship of the Est Cobalcescu Block with a 40 per cent stake. Petromar and Beach will each hold a 30 per cent stake.

Beach Energy will pay a 30 per cent share of past costs on the licence, Melrose Resources said today, as well as carrying Melrose's share of a recently completed 3D seismic survey, which cost an approximate $4.8 million. The initial cost of these two obligations will be approximately $8.4 million to Melrose. This agreement is also expected minimise Melrose's drilling costs by around $16 million over the next two years.

Melrose CEO, David Thomas, said that the reduction in cost of exploration was an advisable approach to take on this and one other block in the Black Sea.

"We are pleased to announce the farm-out which is consistent with our strategy to align the Company's working interests in Est Cobalcescu and the neighbouring Muridava concession at 40 per cent," he said.

"Both licences offer material exploration potential in an under-explored region of the Black Sea. However, it is prudent at this stage to share some of the investment risks on the multi-well drilling program planned on the blocks over the next two years."

Beach Energy said today that the opportunity to join the Block provided the company with a low-cost entry to the Romanian gas market.

"Romania has a long and well established oil and gas industry, having produced 4.4 billion barrels of oil and 27 TCF of gas," Managing Director of Beach, Reg Nelson, said. "The Romanian industry is currently undergoing a renaissance.

"The farm in agreement provides Beach with a low cost entry to develop further business opportunities in Romania. We are looking forward to the results of the 3D seismic in the Black Sea, with six oil leads and 12 gas leads already identified from existing 2D seismic."