Sound Oil takes over W. Java block operatorship after partners fail to pay cash call
Tuesday, March 18 2008 - 10:13 PM WIB
The defaulting parties are the Operator, Bumi Parahyangan Ranhill Energia Citarum Pte. Ltd.(BPREC) and Bumi Parahyangan Energi Pte. Ltd. (BPE).
BPREC has a 60% participating interest in the PSC and is in default for $4,398,148. BPE has a 20% participating interest and is in default for $1,466,049. Mitra has a 20% participating interest, the company said
The default took effect at midnight 17th March 2008. If after 60 days the defaulting parties have not cured their default in all respects, they will forfeit their participating interest to the non-defaulting party, the company said, adding that it had assumed interim operatorship at the block.
?In order to cure their default, the defaulting parties are required to pay to the non-defaulting party their share of any such outstanding cash calls. All such reimbursements are subject to interest at the monthly LIBOR dollar rate plus 5%,? the company said.
"Sound has been very sympathetic and understanding to the difficulties faced by its partners in paying their share of the Citarum cash calls. The majority of these calls relate to contractors who are claiming money for services supplied in drilling last year's Pasundan well. We undertook this serious action of default only after other alternatives which had been under negotiation were not realized, and when it was evident that the approved seismic work programme for 2008 was not occurring because of unpaid cash calls by the defaulting parties. As a result of the potential increased financial exposure relating to this default, Sound is making a strategic review of its assets".
The Citarum Production Sharing Contract is an exploration area of over 4000 sq km, situated to the south and east of Jakarta, Java. The Pasundan 1 well was drilled between 9th May and 27th September 2007.(alex)