Medco farms-out Papua exploration block

JSX-listed oil company Medco Medco E&P is farming-out 75 percent interest in Yapen exploration block offshore Papua to Maraja (Yapen) Energy Ltd, leaving the company 15 percent interest in the block, venture partner Continental Energy said Wednesday.

Continental said Maraja would also assume daily operations of the Yapen Block from Medco. Under an arrangement with Maraja, Continental will manage exploration activities on the Yapen Block, and Maraja will provide financial management.

The farm out agreement requires the drilling of at least two exploration wells prior to September 27, 2005 on the 2.4 million acre Yapen Block, located offshore Papua (Irian Jaya). Estimated cost to drill the two exploration wells is in excess of US $10 million.

Continental's 60% owned subsidiary, Continental-GeoPetro (Yapen) Ltd., owns a 10 percent carried interest in the Yapen Block, and its share of exploration costs are carried to first discovery by Medco and Maraja.

Maraja is a business unit of a privately owned Indonesian based company with a wide range of oil and gas production and transport businesses. (alex)