(MENAFN - ProactiveInvestors - Australia) BioProspect (ASX: BPO) will soon hold a 35% stake in Nassipping-2 operator Frontier Oil Corporation (FOC) after their stake exchange agreement was approved by Frontier's shareholders.
Under the agreement, BioProspect will exchange its 50% shareholding " consisting of 2.5 million shares " in Frontier Gasfields for 430 million new FOC shares, representing a 35% stake in FOC prior to the Philippines company carrying out an initial public offering.
BioProspect has previously flagged that it plans to distribute most or all of the FOC shares to its shareholders by way of a capital return. These shares are subject to escrow for 365 days.
FOC, which is planning a US30 million to US50 million IPO on the Philippines Stock Exchange has also been given the green light to acquire the remaining 25% of Frontier Gasfields.
Should the IPO raise the maximum amount sought, BioProspect's stake in FOC will drop to about 13%.
Following the completion of the transactions, FOC will hold a 100% stake in the onshore Service Contract 52, Luzon Island, that contains the Nassipping-2 gas appraisal well.
Re-entry of the well in February this year confirmed the presence of hydrocarbons within a gross 200 metre column in the Callao limestone.
The well was flowed to the surface for about 26 hours before being shut-in to allow a pressure build up prior to the commencement of a multi-rate flow test though FOC was unable to establish a stable and sustainable measurement.
A consulting firm engaged by Frontier Gasfields to analyse the data identified formation damage from the initial drilling in 1985 as the major cause of the wells problems and concluded that a follow-up stimulation exercise is warranted to mitigate that formation damage.
This is expected to improve initial and long-term production and flow rates substantially. Planning for a new re-entry program using a coil-line tubing unit is now well advanced.