Blackspear will farm into leases where the Yates oil formation is said to be between 50 feet (ft) and 60 feet thick and lying at an average depth of 1,200 feet.
Permex believes that the excellent 10-acre well spacing provides the opportunity for an estimated 32 locations to be drilled and completed at an estimated cost of between US$50,000 and US$80,000 per well.
Significantly, Blackspear will bear the entire cost of the drilling and completing the operations.
"Permex Petroleum is excited to have executed the Farm-out Agreement thereby securing the relationship with Blackspear as a Venture Capital strategic partner," said Mehran Ehsan, the president and chief executive of Permex.
"This partnership will enhance Permex's ability to drill and develop its assets without accessing debt or further accessing equity markets, thereby reducing the debt and market dilution risk and strengthening the Company's ability to perform its reserve development program in a timely fashion."
Khaleel Meghji, president of Blackspear Capital added: "We believe the Oxy Yates property is a very promising oil and gas field and that Permex Petroleum's portfolio of Texas and New Mexico acreage is among the most exciting farm-in opportunities we've evaluated in the region.
"We look forward to working closely with Permex to define and execute the drilling opportunities as quickly and economically as possible."
Upon the farmee (Blackspear) earning any income from the sale of any oil, natural gas, or other hydrocarbons, the farmor (Permex) shall retain a 25% working interest before payout in the assigned leases applicable to that particular well until farmee has recovered its costs (after payout).
Then, Permex shall retain a 50% working interest in the well.
Permex shares added 10% on the day to stand at C$0.55 each.