Under the terms of the agreement, subject to approvals, the two firms have agreed for an upfront cash payment of $8m.

The transaction also includes a firm commitment to fund the first $10m for the initial exploration well apart from all associated G&A and overhead costs incurred by the operator until the first expenditure is finished.

Pan Orient president and chief executive officer Jeff Chisholm said: "Pan Orient has demonstrated significant progress towards the corporate initiative of strengthening the Company’s balance sheet and de-risking its portfolio of assets, through partial sale or seeking partners.

"The final goal is to retain meaningful working interests with significant upside exposure and a strong balance sheet, facilitating growth and flexibility going forward. Today’s announcement is a significant milestone towards this goal and is an important addition to the sale agreement of a 50% interest in the Thailand L53/48 asset entered into and announced last week."

Additionally, Pan Orient has an option to buy a 20% working stake in a Talisman operated South Sumatra joint study area as part the transaction, which is expected to be completed in March 2015.

Talisman Energy has also agreed for a contingent commitment to fund the first $5m for an appraisal well, if justified, apart from all related G&A and overhead incurred by the operator until the first $5m expenditure is completed.