Under the deal, Siam Moeco will receive 100% working interest and the operatorship of the concession.

In return, the joint venture partners will receive a payment of $8.5m on commencement of commercial production and a 2% overriding royalty interest over the concession, capped at $10m.

The transaction, however is subject to government approvals, the company said.

The companies also can maintain an indirect interest in the commercial outcomes from the L20/50 concession.

Siam Moeco, a wholly owned subsidiary of Mitsui Oil Exploration Company, is an active explorer and producer in Thailand and it is the operator of onshore exploration concessions and production licences to the north of the L20/50 Concession.

Carnarvon Thailand, a wholly owned subsidiary of Carnarvon, with holding of a 55% interest, operates the concession, while its co-partner Sun Resources own the remaining 45% interest in the project.

The farm out agreement was reached as the companies as they intended to focus their resources on other activities within their respective businesses.