Kairiki Energy of Australia said yesterday that it has signed a conditional agreement with a private oil and gas investment company to sell its 17 percent interest in a portion of service contract 54 in northwest Palawan.
Kairiki Energy owns a 40 percent stake in the oil exploration area while Nido Petroleum Ltd. holds 60 percent.
SC 54 covers the Yakal and Tindalo oil discovery fields, which have potential reserves of over 35 million barrels of oil.
ISIS Petroleum Consultants Pty Ltd. earlier reported that Yakal had potential reserves of up to 10.7 million barrels while Tindalo had 24.5 million barrels with a recovery factor of 35 percent and 45 percent, respectively.
Kairiki Energy under the agreement will retain a 23 percent stake in the concession after the deal with the undisclosed oil and gas company is finalized.
The company also said that the exploration area would be divided into SC 54-A covering the concession near the shore and SC 54-B away from the coastline.
“Kairiki will retain a 23 percent interest in the inboard portion of SC 54 [SC 54-A] and a 40 percent interest in the remainder of SC 54 [SC 54-B],” the company said.
The company said the investors would earn a 17 percent interest in SC 54-A by reimbursing Kairiki Energy $7 million of its past costs, plus funding the next $6 million of Kairiki’s remaining 23 percent share of the SC 54-A work program.
“The investors are particularly experienced in drilling and engineering operations and strategically aligned to deliver first oil by early 2010 from the shallow water portfolio,” Kairiki Energy said.
It said the farm-out would retroactively take effect from March 1 but was conditional on finalization of a formal farm-out agreement by April 15.
“We are extremely pleased to have entered into an agreement to farm down part of our interest in the inboard portion of SC 54, retaining a material equity position in both the inboard and outboard portions of SC 54, so shortly after completing the successful drilling campaign in late 2008,” said Laurie Brown, Kairiki Energy’s managing director.
He said the transaction would bring Kairiki Energy one step closer to realizing its goal of delivering a production revenue stream in the near term and was consistent with the company’s strategy to acquire projects with relatively low risk, undertake extensive technical work and introduce a partner of strategic value to assist in the development of those projects.–Alena Mae S. Flores, Manila Standard Today
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