It sees Mosman sell a portion of its 60% stake in Champion in return for project funding commitments.
Xstate will acquire a 25% interest in Champion by first paying US$50,000 and covering 33% of the costs of a new well and the installation of production facilities (its disproportionate outlay will be capped, once gross well costs exceed US$600,000, after which it will pay its 25% share).
Additionally, a 25% interest in a second lease area can be acquired by Xstate if it pays 33% of well drilling costs in that area (with the cap threshold of US$450,000 gross).
Mosman noted that it will retain a material (35%) stake in the Champion leases, and, the deal significantly reduces costs and funding requirements to the AIM-quoted firm.
Champion is among the assets in which Mosman is partnered with Baja Oil & Gas. It is a follow on project from the successful Stanley venture.
"The technical advantage of 3D seismic and directional drilling has been demonstrated at Stanley, and we look forward to applying this technology to drilling at Champion, as well as further development wells at Stanley and Challenger projects in due course," said John Barr, Mosman chairman.
In Wednesday’s early deals on AIM, Mosman shares rose by 8.74% to change hands at 0.52p each.