Under the deal, Ausam will earn a stake in PL 119, PPL 58 (Downlands Pipeline Licence) and the Bainbilla Block in ATP 471P by agreeing to spend $6.5 million in seismic acquisition and drilling up to four wells in two stages.

Mosaic told the ASX this morning it would operate these farm-in wells and remain as operator of the acreage.

It said the three companies expected to drill all three wells, including an exploration commitment well, in the Bainbilla Block, before the end of this calendar year. To help meet this timetable, Mosaic and Ausam are members of a group of operating companies negotiating to mobilise a rig from Western Australia to the Surat-Bowen Basin for a multi-well drilling program planned to start in July.

“This significant farm-out program for the Surat-Bowen Basin is part of Mosaic’s strategy to accelerate the exploration and exploitation of its assets via farm-out, while actively pursuing new ventures for medium to long-term diversified growth,” Mosaic chairman Dr Don Stammer.

“This transaction follows the PL 15 farm-in option granted to Bow Energy, announced in March 2006. Mosaic is also actively engaged in farming out the Onerry A Block of ATP 471P and ATP 709P as a continuation of this strategy.”

Dr Stammer said the joint venture deals gave Mosaic prudent risk management, while still retaining significant equity exposure to benefit from high oil and gas upside potential.

“These joint ventures will accelerate our exploration and exploitation activities and, if successful, will add production and incremental cash flow. They will also allow us to direct Mosaic’s cash to new venture acquisition and oil development activities,” he added.

In March, Ausam signed a farm-in agreement with Rawson Resources to earn a 50% interest in its Surat Basin permit ATP 552P. The company is also part of a 50:50 JV with Lakes Oil in Gippsland Basin permit PEP 166, and is a partner with Origin Energy and Santos in the Surat Basin’s PL 71.