PERTH (miningweekly.com) – ASX-listed junior Rey Resources has signed an agreement with fellow-listed Key Petroleum and Indigo Oil to acquire the Lennard Shelf blocks, in Western Australia.

Lennard Shelf constitutes one exploration permit, one retention lease and one production licence covering some 1 145 km² of land considered prospective for conventional oil and tight gas.

In exchange for the Lennard Shelf asset, Rey will transfer its wholly-owned subsidiary Rey Oil Gas Perth, which holds a 43.47% interest in an exploration licence in the Perth basin, to Key.

Indigo Oil has agreed to transfer its interest in the Lennard Shelf blocks to the Key subsidiary Gulliver, which will be acquired by Rey.

Following the transaction, Gulliver will grant a commercial royalty of 2.5% and 0.5% to Key and Indigo, respectively, over the retention lease and production permit on the completion of each applicable transfer.

Key told shareholders on Monday that the transaction with Rey consolidated the company’s position in the onshore Perth basin, and allowed Key to focus on lower cost and risks oil exploration and development as well as pursuing conventional gas exploration opportunities in the Cooper basin.

“The company is pleased to have executed this agreement as we now have a strategic exploration portfolio within two prospective pertroleum basins which are both located adjacent to infrastructure and markets,” said Key MD Kane Marshall.

“Key has a clear commercial path to near term oil production in the Perth basin and conventional gas exploration in the Cooper basin. The position of our Cooper basin assets is particularly important with the imminent completion of the Northern Gas pipeline that will connect the Carpentaria gas pipeline from Mount Isa to Tennant Creek.”

Rey MD Wei Jin said that the company had started the process to attract a farm-in partner to assist in the development of the Lennard Shelf blocks.