Raisama picks up further interest with NPV of A$22M in Cadlao oil project
Raisama (ASX: RAI) has acquired an additional stake in the Cadlao oil redevelopment project offshore Philippines, adding 1 million barrels of proved and probable reserves with a net present value of A$22 million.
The company is acquiring Energy Best Limited, which holds a 40 percent interest in VenturOil, and will also fund VenturOil’s share of development costs on the Cadlao project to earn a 16.25 percent indirect working interest in the project.
The acquisition terms for Energy Best consists of an initial fee to the vendor followed by two further cash payments from each of the first two liftings of oil from Cadlao though the exact terms are unknown.
Meanwhile, Raisama will fund VenturOil’s 20 percent share of development costs on the Cadlao project, which are estimated to be between $8 million (A$7.8 million) and $10 million depending on the final development solution approved by the Philippines Department of Energy.
VenturOil is only obligated to pay these costs following the spudding of the first development well, which is scheduled for the first quarter of 2013.
This closely ties project funding with project revenues, leaving Raisama with no near term obligations. In addition, Raisama believes that Cadlao’s certified reserves will allow its commitments to be partially debt funded.
Raisama added the acquisition is separate and distinct from its earning of interests under the farm-in agreement with Blade Petroleum Limited, which is currently undergoing arbitration.
Cadlao background
Cadlao in Service Contract 6C has proved and probable reserves of 6.05 million barrels of oil and could produce over 11,400 barrels of oil per day with gross cash flows of over A$300 million expected in the first 12 months of production.
The field, located 400 kilometres southwest of Manila was discovered in 1977 by Amoco.
It was developed in 1981 and produced about 11 million barrels of light oil from 2 wells before output stopped in 1991 due to high operating costs and low oil prices.
Since then, 3D seismic acquired over the field has confirmed that large volumes of oil still remain in the reservoir.
The Cadlao redevelopment project is expected to be very low risk due to its demonstrated production history. It could also play a role as a regional production hub due to nearby discoveries and low risk exploration prospects.
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Category: ResourceAsia
