The Melbourne-based company today said it had acquired the 50% interest from Brazilian independent oil company, Silver Marlin, which will hold the remaining stake.
ERH said Reconcavo is an onshore producing basin with “good pipeline and refinery infrastructure and a long history of oil exploration and development.”
The blocks were awarded to Silver Marlin in Brazil’s 2005 licensing round and cover about 140 square kilometres. Under the licence terms, Silver Marlin has two years from January 12, 2006 in which it must complete a minimum work program.
To retain any of the blocks for a second exploration period of one year, Silver Marlin must drill one well per block.
ERH said it would farm-in to the blocks by paying 100% of the seismic acquisition and processing cost during the first exploration period, to be agreed by the parties.
It must also pay 80% of the cost of the first well in each block where the parties elect to enter the second exploration period and all expenses thereafter in proportion to its participation in the blocks.
The Reconcavo Basin was for several decades the main oil province in Brazil. Last year it ranked second among the Brazilian onshore basins, producing 49,700 barrels of oil and 5 million cubic metres of gas per day.
The deal is subject to Brazil government approval, ERH shareholder approval, completion of final formal documentation, due diligence by ERH and all regulatory approval.