New Zealand Oil and Gas (ASX:NZO) has finalised a binding farm out agreement (FOA) with Triangle Energy (ASX:TEG) to acquire a 25% participating interest in the L7 Production licence and exploration permit EP 437.

The company says the execution of the FOA comes following the completion of all confirmatory due diligence and includes paying a 50% share of the Bookara 3D seismic costs totalling $1.9 million, subject to customary regulatory approvals including DMIRS and FIRB.

New Zealand Oil and Gas notes in addition to these upfront costs, and consistent with the binding term sheet signed in January, the company will fund an uplift of costs of 3 exploration wells to be drilled in 2024, with a forecast expenditure of $9.96 million.

“hese are companies that share a similar corporate and technical ethos with NZO, and we will be working closely together to leverage our combined expertise”

Payments are expected to be paid as costs are incurred.

The company also notes these exploration wells will target the highly prospective Early Permian-aged reservoirs identified by the Bookara 3D seismic survey, which are reported to be analogous to recent discoveries in adjacent permits, including Lockyer Deep, Waitsia, West Erregulla, and South Erregulla.

Costs of all existing rehabilitation and restoration obligations for L7 and EP 437 are to be borne exclusively by Triangle.

With the FOA between both parties nwo signed, New Zealand Oil and Gas announces the regulatory approval process is set to begin, and that planning is underway to secure drilling slots in 1H 2024.

Following completion of works, the permits joint ventures (JVs) will comprise Triangle with a 50% interest and operator, New Zealand Oil and Gas with a 25% interest, and, subject to completion of its own farm-out agreement, Talon Energy (ASX:TPD) with an additional 25% interest.

Commenting on the FOA, New Zealand Oil and Gas Chief Executive Officer (CEO) Andrew Jefferies said: “With this farm-in we are continuing to execute our board’s strategy. It’s great to be partnering with Triangle and Talon. These are companies that share a similar corporate and technical ethos with NZO, and we will be working closely together to leverage our combined expertise to drive shareholder value through successful exploration.”

New Zealand Oil and Gas is an ASX-listed company actively working to grow by acquiring non-operated interests in high quality production assets that have development upside in its regional areas of focus. The company is based in Wellington, New Zealand with production interests offshore Taranaki, New Zealand, onshore in Australia’s Northern Territory, and through its ASX-listed subsidiary in Indonesia.