Focus backs out of Tindalo venture Amy R. Remo Philippine Daily Inquirer
July 04, 2009
MANILA, Philippines — Focus Oil and Gas Pte. Ltd. of Singapore will no longer buy a 17-percent stake in Service Contract 54 covering an oil and gas concession off Palawan, following the lapse of the farm-out agreement with Kairiki Energy Ltd.
In a regulatory filing, Kairiki managing director Laurie Brown said Focus Oil was unable to meet its financial obligations under the farm-out agreement signed in April.
Brown, however, said Kairiki had a “strong cash position” to pursue the development of the Tindalo oil discovery under SC54, even without the $13 million that Focus Oil was supposed to contribute to the consortium.
The $13 million would have been paid in two tranches—an upfront payment of $7 million and another $6 million later to partly fund the SC54A work program.
“Following the recent oversubscribed placement to sophisticated investors and institutions, Kairiki’s cash position (as of June 30) is very strong, having recently raised approximately $8.1 million,” Brown said.
She said these funds would provide Kairiki with the “financial capability to pursue the development of its Tindalo oil discovery in the Philippines in the near term as previously announced, with the flexibility of retaining its 40-percent interest in the inboard portion of SC54.”
Nido Petroleum, another Australian firm, owns the remaining 60 percent and is the operator of the service contract.
The joint venture has access to more than 1,000 square kilometers of 3D seismic data, which the two companies acquired in 2006 and 2007, and some 7,500 km of 2D seismic data, which yielded the current prospect and leads inventory.
Using a jack-up production facility, Nido and Kairiki expect to draw first oil by early 2010 from the Tindalo oil discovery, which is in the shallower portion of the SC54 area.
The Tindalo prospect is expected to yield up to 24.5 million barrels of oil and can provide a second cash flow stream within the next 12 months.
