Under the deal, Pine Brook will contribute $US7 million ($A7.38 million) of cash and $US2 million of assets in the Rocky Mountains that it had acquired from Strike Oil, while Comet Ridge will contribute its US assets, valued at $US7 million.
Pine Brook will retain 56.25% of the equity in CRR and have the right to increase its ownership to 80% by investing another $US19 million of CRR's capital spending
From that point, Comet Ridge has the option, but not the obligation, to fund 20% of any additional capital spending to maintain a 20% interest, or may continue to be diluted down to a minimum interest of 5% without being required to fund any additional capital spending.
Comet Ridge said the agreement allows its US assets to be tested at no further cost to its shareholders while maintaining the option to invest additional funds if and when the projects have been substantially de-risked.
CRR will own a 75% stake in the Tow Creek project, a 77.5% interest in the Bear River project and 97.25% of the Florence project in the Rocky Mountains, and in June or July will start a multi-well drilling program on Florence and Tow Creek.
The company will also hold a 100% interest in the Grays Harbor Basin and Chehalis projects in the Pacific Northwest.
CRR plans to shoot seismic over a number of leads and prospects this year in the projects and plans to start a drilling program in 2009.
Comet Ridge's US-based management team and staff will resign and become employees of CRR, the newly formed entity while managing director Andy Lydyard will continue during a three-month transition period to manage the company's business interests in Australia and the US until a new Australian-based management team can be established.
Lydyard will remain a non-executive director of Comet Ridge and will be chief executive of CRR and serve on the five-member CRR board along with another Comet Ridge director David Bradshaw and three Pine Brook Directors.
"We have worked very hard to bring in capital to test our US projects," Comet Ridge chairman Jeff Schneider said.
"Pine Brook is not only a very reputable funding source, but one with deep technical experience in the oil and gas business."
Comet Ridge retains a 40% interest in the Mahalo coal seam methane project in the Bowen Basin of Queensland, 100% interest in two large permits in the Galilee Basin in central Queensland, and 60-70% interest in two permits in the Gunnedah Basin, New South Wales.
