Kairiki Energy has provided an update on progress of its SC 54A farmin negotiations announced on 11th July 2011. The company and selected farminee party (“Party”) have signed a Letter Agreement that outlines the agreed commercial terms of a farmin and is subject to a number of conditions.
The transaction contemplated will result in Kairiki reducing its interest in SC 54A from 30.1% to 15.05% in return for the Party funding Kairiki’s remaining 15.05% participating share in the drilling of one exploration well within the permit before the end of 2012.
If the well is successful, the Party will also fund Kairiki’s participating share in the cost of a Drill Stem Test (DST). The transaction will be conditional upon: • The execution of a Farmin Agreement (the negotiation and preparation of which is expected to be concluded in the coming weeks); • The approval of the respective Boards; • The completion of due diligence by both the Party and Kairiki, and; • Necessary approval for the transaction from the Philippine Government, regulatory authorities and Kairiki’s third party financiers. A condition of the farm-in negotiations requires the identity of the Party together with the terms of the arm-in agreement to remain confidential until the necessary documents have been executed.
SC 54 is located in the productive North-West Palawan basin in water depths ranging from 30 metres to 1,100 metres and covers an area of 5,418 km2.
Kairiki acquired its interest in May 2006 by farming into the Permit held by Nido Petroleum Limited. The Joint Venture has access to over 1,000 km 2 of 3D seismic data (largely acquired by the JV in 2006-2007) and some 7,500 km of 2D seismic data which has developed the current prospect and leads inventory.
[mappress] Source: Kairiki Energy, March 20, 2012