In May, the companies signed a memorandum of understanding for the sale of Kimberley Oil’s interests in Western Australian permits EP104, EP371, EP390, EP391, EP428, EP431 and EP436 for 35 million convertible notes in Golden Dynasty.
These were supposed to be distributed in specie on a pro rata basis to Kimberley Oil's shareholders – worth about A$5 million. The notes were then meant to convert immediately to ordinary shares for listing on the ASX.
“A fundamental aspect of the transaction contemplated by the MOU was the ability to deliver Golden Dynasty shares in Australia to Kimberley Oil shareholders,” Kimberley Oil said.
“That became impossible as Golden Dynasty’s capital structure did not comply with the listing rules of the ASX.”
While this acquisition may have fallen through, Golden Dynasty says it still plans, under an existing agreement, to earn an 80% interest in Kimberely Oil subsidiary, Terratek Drilling Tools, and pursue other farm-ins and farm-outs in the Canning Basin.
Under last November’s agreement, Golden Dynasty committed to spend $3.5 million in exploration permit 129 and production permits L6 and L8 for the acquisition, Kimberley Oil said.
The expenditure program includes the drilling of the Boundary Development Well in EP129. In addition, Golden Dynasty has implemented a work program to enable up to two wells to be drilled on the designated site, Kimberley said.
As well as its equity interest, Kimberley Oil will retain a 2% well head royalty in Terratek and a 5% gross royalty in KOR.
The proposed Boundary Development Well is updip from the Boundary 1 Well in EP 129. Boundary 1 has produced 115,000 barrels of oil from an intra-Grant sandstone bed at a depth of 1277 metres to 1281 metres. Seismic data indicates that the well was drilled on the northwestern edge of an anticline and that the crest of the structure is to the southeast, Kimberley said.
