Sydney (Platts)--18Feb2011/508 am EST/1008 GMT

US-based Magellan Petroleum and its strategic investor Young Energy Prize have executed an agreement for YEP to commit A$85.45 million (US$85.91 million) to enable Magellan to complete its purchase of a 40% stake in the Evans Shoal gas field in Australia's Timor Sea.

YEP, which is controlled by Russian resource magnate Nikolay Bogachev, is expected to use some of the funds to reimburse Magallan for the additional deposit of A$10 million paid toward the purchase from Australia's Santos on February 14, Magellan said in a statement Thursday.

"The investment agreement also addresses some of the main terms of the potential future development of the Evans Shoal field between the company and YEP," Magellan added.

The purchase is now expected to be completed sometime before May 31, 2011. Magellan agreed to buy the stake in Evans Shoal from Santos last March, for payment of A$100 million cash on completion, with further payments of A$50 million due when a final investment decision on a development is made and again when first gas production occurs from the NT/P48 permit which covers the field.

Evans Shoal was discovered in 1988 and has an estimated contingent gas resource of around 7 Tcf, according to Magellan. The other stakeholders in the field are Malaysian state-owned Petronas (25%), Shell (25%) and Japan's Osaka Gas (10%).

Magellan has said it believed methanol production was the best development option for the field, given its high CO2 content.

--Christine Forster, christine_forster@platts.com

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