Global said today it had signed a non-binding Memorandum of Understanding under which private United Kingdom petroleum group, Falcon Oil & Gas Ltd, would farm-in by year's end to Global's half share in two offshore Montenegro blocks.

"The parties will now commence negotiation of a binding agreement through which Falcon would fund the initial seismic survey and all related processing and interpretation to earn a half share of Global's stake in the Montenegro contract areas," Global's executive chairman, Dr John Armstrong, said today.

"We are targeting finalisation of a legally binding farm-in agreement by next month, subject to resolution of a number of issues. These include resolution of the Montenegro-Croatia border, re-documentation of agreements between Global and the former Government but now privatised Montenegro petroleum entity, AD Jugopetrol Kotor - the blocks' current other JV party - and agreement to extend the deadline for completion of the seismic work to late 2004," Dr Armstrong said.

The binding agreement is intended to give Global a free-carried interest on its initial work commitments over the blocks with Falcon funding up to a maximum of around $1.25 million of seismic and related costs on this project in 2003/04.

"It is intended that when the agreement is reached, Falcon will become operator with seismic recording to commence later this year or early in 2004," Dr Armstrong said.

There are two wells in the acreage. One recovered oil and the second had gas shows. The seismic work by Falcon will target several leads nearby these wells.