Indago Petroleum Limited announces that a settlement has been reached on its insurance claim in relation to the underground blowout suffered at the Al Jariya well on the Jebel Hafit prospect in February of 2008.
Jebel Hafit is located in Block 31, onshore the Sultanate of Oman and Indago holds an approximate 50% interest in the Block through a wholly-owned subsidiary. RAK Petroleum Oman Limited ("RAK"), the operator of the Block, owns the balance of the interest in the joint venture (the "JV").
The JV has accepted an offer by underwriters of a full and final net cash settlement incorporating a payment in lieu of being reimbursed for re-drilling the Al Jariya well, plus reimbursement of the final tranche of costs incurred by the JV in controlling the well at the time of the blowout. (the "Settlement").
Once the Company has received its share of the Settlement, it is projected to have cash balances in the region of $38 million. It is anticipated that all the Settlement monies will have been received by the end of March 2009.
Technical evaluation of the Jebel Hafit structure is ongoing. As previously announced, the latest analyses have concluded that the upper reservoir target (the Natih) was penetrated and was demonstrated to contain water. The lower reservoir target (the Shuaiba), which has not been penetrated, was estimated in the pre-drill analysis to contain around 80% of the prospective resources.
Discussions are being progressed with RAK and Oman's Ministry of Oil and Gas in relation to the way forward on Jebel Hafit and Block 31 generally. On other operational and corporate activities, the Company has no developments to report at this time.
David Bremner, CEO, commented:
"I am very pleased that the JV has been able to reach this settlement with the insurers. The Board concluded that this outcome is in the best interests of the shareholders because it gives the Company both greater financial certainty and added flexibility in terms of strategic alternatives. It also allows the Jebel Hafit project to be progressed in a measured fashion, rather than according to a timetable set by the terms of the insurance policy".