Australia’s Kairiki Energy divests offshore Palawan petroleum assets

• Source: http://www.bworldonline.com/content.php?title=australia&8217s-kairiki-energy-divests-offshore-palawan-petroleum-assets&id=109416
• Tuesday, June 9, 2015 10:31:00 pm

By Claire-Ann Marie C. Feliciano

KAIRIKI Energy Ltd. has decided to divest from its petroleum assets in the Philippines, citing uncertainty over the contract areas located offshore Palawan.

The company said in a disclosure to the Australian Securities Exchange that it terminated the binding term sheet with Focus Oil and Gas Ltd, resulting in the “disposal of its entire interest in the share capital of Yilgarn Petroleum Philippines Pty Ltd.”

Yilgarn is a joint venture company that holds a 30.1% participating interest in Service Contract (SC) 54 A and 40% in SC 54 B -- which covers resource areas in waters northwest of Palawan.

Cited as the cause of the decision to dispose the interest was “the likely non-satisfaction of the condition precedent” on the agreement with Focus.

Kairiki said the Philippine Department of Energy (DoE) granted a moratorium on SC 54 “to give the joint venture sufficient time to study the development of the discovered marginal resources in the block.”

The moratorium -- which runs from Aug. 4 of last year until Aug. 5, 2017 -- will give the joint venture the option to enter into another sub-phase at the end of the term, which entails the commitment to drill one well.

“If the joint venture elects to continue into the production period, the three-year moratorium period will be automatically deducted to the initial production period,” the disclosure read.

Given its minority interest, Kairiki said it has minimal control over future activities covered by the contract.

The company also noted that “the moratorium approved by the DoE could potentially result in the company being relatively inactive through... August 2017.”