It also gives New South Wales' only offshore potential gas project an experienced operator.
According to Sacgasco managing director Gary Jeffery, his company remains focused on California but sees great opportunity in the Sydney Basin and, like Sacramento, the area is adjacent to a large, under-supplied market.
"This is a great deal for both RL Energy and Sacgasco. The agreement will help the PEP11 project move forward with the experience and support of a strong oil and gas team," he said.
The PEP11 joint venture now has the ability to fund future work programs and work towards supplying a tight market, he said.
RL founder Greg Channon said he thought the planned 3D seismic would confirm a multi trillion cubic feet drillable prospect and if successfully drilled would have significant positive impact on that east coast gas and energy market.
Sacgasco will acquire 100% of the issued capital in RL, which signed a farmin agreement in May with MEC Resources' investee Asset Energy to take a 60% working interest in the offshore Sydney Basin permit by carrying out seismic tasks.
Sacgasco will now fund RL and develop a new work program.
RL and Sacgasco will support the lodgement of an environmental plan for 3D seismic acquisition with the Sacgasco putting up the $326,000 in funds.
When complete Channon will join the Sacgasco board.
Under the terms there will be payment of a $25,000 option fee and two million Sacgasco shares to RL's shareholders. It will have an exclusive option to acquire all shares in RL, whose shareholders must sell their shares upon Sacgasco exercising its exclusive option by January 30.
The total consideration paid to RL shareholders will be $25,000 and four million fully paid ordinary Sacgasco shares. Sacgasco will assist in the lodgement of an EP for the 3D seismic at a cost of $326,000.
Sacgasco is up over 10% this morning, trading at 3.2c
