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Nido Petroleum Philippines Pty Ltd a subsidiary of Nido Petroleum Limited, in conjunction with SC 54A Joint Venture partners Yilgarn Petroleum Philippines Pty Ltd, Trafigura Ventures III B.V. and TG World B.V.I Corporation (“the Participants”), is pleased to announce the signing of a Memorandum of Agreement (“MoA”) with Viking Energy Holdings 2 Ltd (”Viking”) to develop three oil fields in SC 54A. The MOA is subject to negotiation and execution of a formal agreement between the parties.
The MoA outlines key commercial terms upon which a Farm-in Agreement will be subsequently negotiated in the next few weeks. Broadly, these terms are as follows:
• The Participants will collectively assign a 60% equity interest in SC 54A in return for Viking assuming Operatorship and carrying the Participants in three oil field developments up until first oil;
• Viking will finance all required capital expenditure associated with bringing the Yakal, Tindalo, and Nido 1X1 undeveloped oil fields into production. This will include the drilling of one well in each field;
• The final investment amount will be agreed between Viking and the Participants on selection of the most appropriate technical and commercial solution; and
• Viking will receive a preferential proportion of the net cash flow generated from SC 54A until such time as it has recovered in full its capital expenditure in the project.
Viking envisages bringing the Yakal and Tindalo discoveries into production in the first instance followed by Nido 1X1 at a later stage.
Viking plans to utilise cost-effective offshore production and storage facilities consisting of a mobile offshore production unit (“MOPU”) and a FSO/Storage Tanker moored to a CALM Buoy to commercialise the three oil fields. The Participants and Viking will work in collaboration with Offshore Production Solutions (“OPS”) and Thome Oil & Gas (“TOG”) on the project, whereby OPS will provide offshore production facilities under bareboat charter arrangements on competitive market terms to be agreed; and TOG will provide operation and maintenance services for the offshore production facilities under an operation and maintenance agreement on competitive market terms to be agreed.
It is anticipated that the first field will be brought into production by Q2 2013, subject to relevant approvals from third parties and the Department of Energy of the Republic of the Philippines, and the availability of rig and production facilities.
Nido’s CEO, Mr Philip Byrne, commented, “This agreement paves the way for a successful collaboration with the Viking Group. Viking’s expertise in developing marginal offshore oil fields using cost-effective offshore production facilities is key to securing early economic production from these discoveries”.
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