Winstar has confirmed this week that the company has initiated a process to attract a farm-in partner for its Hungarian concession. The general form of the deal will involve the partner paying 100% of the capital costs to earn a 50% interest, although this may not apply to the entire concession.
For example, the Company may retain 20% and farm-out the remaining 80%. The partner would pay 80% of the capex to earn 40% of the block, leaving Winstar with a total of 60% (the retained 20% plus half of the 80% farmout). Winstar would remain the operator.
The Company’s intent is to accelerate development of the Hungarian assets. As mentioned in a July initiating report, Winstar has five blocks upon which it wants to shoot 3D seismic, and each block would cost approximately $4.5 million. Each block could then require two wells, which with significant testing could also cost $2 million each.
This farmout will bring in a significant amount of capital to expedite that program and still allow Winstar to retain a majority interest and operatorship.
