Chevron sells Cambodia subsidiary

KrisEnergy has reached an agreement with Chevron to buy Chevron Cambodia for $65 million.

Chevron Cambodia owns  a 30% participating interest in, and operatorship of, Cambodia Block A. Cambodia Block A lies offshore Cambodia where extensive exploration work in the licence area since the mid-2000s resulted in the Apsara oil discovery for which a production permit application (“PPA”) was submitted in 2010 and updated in 2012.

The contract area covers 4,709 sq km over the Khmer Basin in the Gulf of Thailand where water depths range from 50 metres to 80 metres. The total consideration for the transaction is US$65 million subject to a working capital adjustment.

Chevron Cambodia will be renamed to KrisEnergy (Apsara) Ltd once an acknowledgment is received for the transaction by the Royal Government of the Kingdom of Cambodia. Joint-venture partners, MOECO Cambodia Co. Ltd (“MOECO”) and GS Energy Corporation (“GS Energy”), have approved the transaction.

Chevron Cambodia’s 30% participating interest in Cambodia Block A will reduce to 28.5% once the Cambodia National Petroleum Authority (“CNPA”) or its successor completes its acquisition of a 5% participating interest in the block. Pre-transaction, KrisEnergy held an indirect 25% participating interest in Cambodia Block A, which will reduce to 23.75% post transfer to CNPA.

Upon completion of the acquisition of Chevron Cambodia, KrisEnergy will indirectly hold 52.25% participating interest in the development block. Cambodia historically has no oil or gas production and the Apsara PPA is the first to be evaluated by the Ministry of Mines and Energy (successor petroleum regulator to CNPA).

KrisEnergy, along with the joint-venture partners, intends to work with the Cambodian authorities to agree the terms and conditions of the PPA before declaring final investment decision for the Apsara development.

Phase one of the Apsara project includes 24 development wells from a single platform with oil processed then stored in an offshore storage vessel prior to commercial sales. This concept is similar to other fields in the Gulf of Thailand. Production from the initial single platform is expected to peak at approximately 10,000 barrels of oil per day.

Richard Lorentz, Director Business Development, commented: “We farmed into Cambodia Block A in 2010 and we believe it has all the makings of a significant oil production area. Chevron, with its experience in the Gulf of Thailand, has done some tremendous work in Block A and we hope that with the KrisEnergy entity now holding operatorship, we will be able to steer the Apsara development plans forward to first production as quickly and cost effectively as possible. We will give this project our full focus as we work with the Cambodian authorities to finalise the Apsara PPA.”

Outside of the immediate Apsara development area, a further six structural trends have been identified and mapped as a result of 3D seismic interpretation or exploration drilling. Two additional future development phases in the Apsara area on the discoveries made to date may involve the installation of up to nine platforms, each with 24 wells. Further development across the entire licence area could involve up to 44 production platforms in seven separate producing areas.

The other participants in Cambodia Block A are MOECO with a 28.5% working interest, GS Energy with 14.25% and CNPA with 5% once formal transfer is approved

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August 11, 2014