Adelphi updates progress on E. Kalimantan PSC
Thursday, April 30 2009 - 08:26 AM WIB
South Bengara II PSC ? Onshore East Kalimantan (Adelphi 50.002%)
As previously advised, Adeiphi acquired a majority interest in the South Bengara-II Block in onshore East Kalimantan following a successful bid in late 2008. The acquisition was in association with Continental Energy Corporation (?Continental?) and GeoPetro Resources Company (?GeoPetro?) via the group?s joint venture company, ACG (South Bengara-II) Pte. Ltd. (?ACG?). Adelphi owns a 50.002% interest in ACG and its new PSC.
ACG, in accordance with the terms of its bid and the PSC, is obliged to pay a signing bonus of US$1 million to the Indonesian Government and to complete a work program during the first three PSC contract years, including at least 100 line kilometres of 2D seismic, and drilling one exploration well for a total minimum expenditure of US$7,850,000.
In accordance with the terms of a Joint Bid Agreement (?JBA?) with Continental and GeoPetro, Adelphi was to be filly carried through the first US$4 million of gross expenditure on this block including the initial US$1 million signing bonus.
Subsequent to the signing of the PSC, Continental and GeoPetro failed to pay the signing bonus on behalf of ACG in the required timeframe as they were contractually obliged to do and are in default pursuant to the terms of the JBA. Despite efforts by Adelphi to seek other potential farm-in partners to take on these funding obligations, this could not be achieved due to the current economic climate.
Adelphi has now reached agreement to assign all of its interests in ACG (and hence the PSC) to a third party for no consideration. Importantly, as a result of this assignment, Adelphi will not have any funding obligations towards the PSC commitments (including the signing bonus). The documentation for this assignment is in the process of being completed. (end of excerpt)