New World Oil and Gas has signed a farm-out agreement (FOA) with ThermaSource International for its Blue Creek Project in north-west Belize.
This agreement is expected to bring a 25% reduction in the daily drilling rate in exchange for a 5% participating interest in each well drilled on the three Blue Creek Projects in Belize.
The company will retain the option of buying back its 5% participation interest at the market price.
However, the buyback must be within 18 months of the declaration of commerciality of any well at a value established by an agreed third party reserve auditor.
New World CEO William Kelleher said the farm-out agreement and drilling contract with ThermaSource are significant milestones for the company, which will begin drilling at Blue Creek in October 2012.
Currently, the agreement enlists the drilling at one of the wells, with an option to extend the same to the second and third wells in the future.
"Combined with the Blue Creek farm-out agreement amendment announced in June 2012, we have now reduced drilling costs by up to 50% from original forecast figures," added Kelleher.