Origin Energy (ASX: ORG) has announced it has executed a farm-out agreement with up and coming oil and gas explorer MEO Australia (ASX: MEO). The exploration permit, known as WA-454-P, is located off the north coast of Western Australia and under the agreement Origin will assume operatorship of the permit.
To attain its 50% share of the permit, Origin has agreed to pay MEO $5.8 million in back costs for expenses already incurred plus Origin has agreed to fund 80% of the cost of drilling an exploration well on the Breakwater prospect which is located within WA-454-P.
This latest announcement comes just weeks after Origin announced the acquisition of Eraring Energy which includes the Eraring Power Station and the Shoalhaven Scheme from the NSW Government and only days after reports arose again questioning whether the company would need to undertake a capital raising to shore up its balance sheet.
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Motley Fool contributor Tim McArthur owns shares in Origin Energy.
