US operator Apache is evaluating a pair of exploration permits offshore Australia for a possible acquisition.

MEO Australia said on Wednesday it had executed a binding option agreement with Apache Northwest in relation to its AC/P50 and AC/P51 blocks located in the Ashmore-Cartier area of the Timor Sea.

Under the deal, Apache has an option until 30 September 2014 to elect to acquire a 70% stake and assume operatorship of the permits commencing upon their renewal, which is due in April next year.

Upon exercising the options, Apache will carry MEO’s share of all costs up to and including the first well drilled in each permit.

The permits are currently in the final year of their six-year exploration term but if Apache goes ahead with the farm-in, the companies plan to renew the permits for a further five years on mutually acceptable terms.

MEO said initial exploration efforts would focus on the AC/P51 Ramble On oil prospect, which has been estimated to hold 39 million barrels of gross prospective recoverable oil resources.

Apache will now complete the evaluation of the permits before deciding whether to proceed with the farm-in, MEO said.