Ambassador Oil and Gas announced Tuesday it has farmed out a 52.5 percent working interest in its highly prospective Petroleum Exploration License (PEL) 570 exploration permit in the Cooper Basin (South Australia) to New Standard Energy for $38.8 million (AUD 42.5 million) in direct exploration expenditure.

The deal, representing an implied value of $0.24 (AUD 0.27) per Ambassador share (not including cash reserves and U.S.A. acreage), also brings one of the U.S. shale industry pioneers, Magnum Hunter Resources Corp., to help guide exploration for high liquids content/low carbon dioxide (CO2) gas targets known to exist in Cooper Basin permit PEL 570. New Standard is an experienced onshore oil and gas explorer in Western Australia.

The new, higher value deal, supersedes an earlier Heads of Agreement between Ambassador and Outback Energy Hunter Pty Ltd., announced in August, which carried an implied value of around $0.14 (AUD 0.16) per Ambassador share. Outback Energy Hunter is being acquired by New Standard Energy as part of a broader corporate transaction which is due to complete in January 2014. Ambassador Oil and Gas CEO, Tino Guglielmo, said, “This deal brings one of the world’s leading shale gas and oil explorers into the Cooper Basin while Ambassador retains a very large stake in PEL 570.”

“Ambassador shareholders have very high leverage to any success which may flow from the $38.8 million (AUD 42.5 million) of exploration expenditure which New Standard will now spend in our PEL 570 block.” “Ambassador Oil and Gas shareholders can be very pleased that one of the world’s most experienced shale oil and gas explorers, Magnum Hunter Resources, alongside New Standard Energy Ltd., will be applying their vast knowledge to assisting us unlock the value of the Patchawarra Trough region of the Cooper Basin.”

“New Standard Energy is acquiring Magnum Hunter Resources’ Eagle Ford shale assets in the U.S. in exchange for cash and shares making MHR the largest shareholder in NSE. As part of that deal NSE is also acquiring a 52.5 percent interest in PEL 570. The consideration for the acquisition of the 52.5 percent interest in PEL 570 is that NSE must spend up to $38.8 million (AUD 42.5 million) on exploration in PEL 570, including drilling three wells over the life of the permit.”

“The first step is to complete a large 3D seismic survey in 2014 followed by three subsequent wells which we hope will begin to unlock the massive potential of this part of the Cooper basin.”

New Standard will operate the permit and carry the costs for the five year program up to a maximum of $38.8 million (AUD 42.5 million) to earn a 52.5 percent equity interest in PEL 570. The PEL 570 farm-in is part of a broader transaction for New Standard Energy, which is also acquiring Magnum Hunter’s Eagle Ford shale assets in the U.S. New Standard is holding a shareholder meeting in mid-January 2014 to approve the acquisition of Outback Energy and the Magnum Hunter Eagle Ford assets.

New Standard Managing Director Phil Thick, said, “The Cooper Basin has experienced significant activity in the past 24 months as some of the world’s largest energy companies seek exposure to the region. Access to the eastern states gas infrastructure and markets and the new export facilities in Queensland is the key driver of this Cooper activity. New Standard is pleased to now have a footprint there too and we are looking forward to working with Ambassador on this exciting opportunity.”

“We are particularly pleased to have found a partner of the caliber of Magnum Hunter Resources, and we look forward to a long and productive relationship together. Magnum Hunter Resources is a highly reputable operator with strong expertise in shale plays across North America,” Thick said.