During the quarter, IPB WA 424P Pty Ltd, signed a Farmout and Funding Agreement and Joint Venture Operating Agreement in relation to its 100% held Permit WA-424-P.
A summary of the key points of this transaction are provided below. For more detailed and supplemental information including the proposed Idris appraisal well please refer to the Company's more comprehensive ASX release dated 30 November 2020.
In summary, Quay will earn a 50% working interest in Permit WA-424-P by providing a US$31m loan secured against the Permit, for the costs budgeted for drilling the proposed Idris apprisal well: approximately US$21.25m, back costs to IPB of US$3.75 million and prepaid interest of US$6 million. The repayment of the loan is to be paid out of future Joint Venture (IPB 50% and Operator and Quay 50%) free cashflow from a development.
Quay has the option to maintain its 50% working interest by providing further funds to the Joint Venture by providing a further loan of US $203 million secured against the Permit, of which $US175 million is to be applied towards the estimated stage 1 field development costs and the balance of US$28 million for prepaid interest. The repayment of the loan is to be paid out of future Joint Venture (IPB 50% and Operator and Quay 50%) free cashflow from a development. If this funding is not provided, Quay's interest reduces to 35% working interest in the permit and Joint Venture.
Update on Timing of proposed receipt of Funds
IPB has been advised by Quay that funding drawdowns for application towards Joint Venture Activities can occur during the first 2 weeks of February 2021, with full drawdown of funding to be completed by end April 2021. This schedule will allow the Joint Venture to confidently commit to long lead items and planning activities comfortably ahead of likely contractual commitment dates. IPB intends to lodge relevant title transfer documentation with NOPTA within the coming 1-2 weeks.
Idris Appraisal Well Activities
During the quarter, studies and commercial activites commenced on scoping, sourcing and scheduling for environmental planning and well management and testing services for the proposed Idris appraisal well. As Operator of the WA-424-P Joint Venture, IPB aims to award certain key contracts within the coming 3 months and commence detailed Environmental Planning work within the coming month, which is considered a critical path item. Under current scheduling, IPB is aiming to be ready to drill Idris by 1st Quarter 2022.
Title Extension
With reference to the Company's ASX release of 17 December 2020, IPB received a 24 month Suspension and Extension to its WA-424-P Permit work Programme. This timing allows for a comfortable margin to complete the drilling, success based testing and evaluation for Idris well ahead of other potential permit related activities.
Activities - Corporate and Financial
During the Quarter, 4,250,000 Employee Options held by Directors and Officers with an exercise price of 3.2 cents expiring 17 November 2020 were exercised raising an additional $136,000 for the Company. The Company held its AGM on 30 November 2020 by way of virtual interface. Following approval at this meeting, the Company issued a total of 4,750,000 Options expiring 7 December 2024 with an exercise price 5.65 cents to Directors and Officers of the Company. As at the end of the Quarter, IPB Petroleum had a cash balance of approximately $0.523 million with no debt.
PERMIT HOLDINGS AND INTERESTS
As at the end of the Quarter, and also as at the date of this report, the Company held an interest in the Browse Basin exploration permit WA-424-P (IPB 100% and Operator). Under the Farmout and Funding Agreement with Quay, IPB expects to transfer a 50% working interest in Permit WA-424-P to Quay during the current quarter.
Contact:
Tel: +61 3 9598 0188
IPB PETROLEUM LIMITED 
