Roc Oil Company Limited (ROC), announced Tuesday that BC Petroleum Sdn Bhd (BCP) the 48 percent owned company incorporated to operate and manage the Balai Cluster Risk Service Contract (RSC), has received approval of the FDP (field development plan) from Petronas for the initial phase in the development of the Bentara Oil Field within the Balai Cluster offshore Sarawak, Malaysia.
Commenting on the FDP approval ROC’s CEO Alan Linn said: "Approval for the initial phase of the Bentara oil development is a direct outcome of the risk managed and staged pre development approach implemented by BCP to appraise and accelerate oil production from the Balai Cluster. In the process, we have also identified additional potential within the cluster area and will be proposing further study and appraisal activity in support of the next stage of potential development from Bentara and associated fields".
Phase I Development
Phase I of the Bentara field development will utilize the existing platform and two wells, producing from both Bentara-2 and Bentara-3 through the EPV Balai Mutiara. The EPV will initially undertake production processing in the same configuration used during the extended well testing phase, however, both wells will be produced simultaneously.
Commencement of production is planned to commence during 2Q 2014. The field is expected to produce at an average rate of approximately 2,000-3,000 barrels of oil per day (bopd) gross during the period, where weather and sea conditions allow the EPV connection to the platform to be maintained.
The FDP requires minimal further investment with all cost expected to be funded from cash flows. ROC as a shareholder of BCP receives cost recovery for past expenditure and this is currently anticipated to occur over the period 2H 2014 to end 2015. The bank funding in BCP of $162 million will be repaid in full by the end of 2014.
Treatment of BCP by ROC
BCP is 48 percent owned by ROC and is equity accounted as an associate company. Under the terms of the RSC, BCP (and ROC) do not have title to the oil produced and therefore cannot book reserves and resources associated with the Bentara oil field. ROC is also unable to show Bentara production within its owned production volumes. All reporting of BCP will occur through the equity investment lines in ROC’s P&L and Balance Sheet.
ROC’s Dec. 31, 2013 Annual Financial results assessed the estimated recoverable value of ROC’s investment in BCP arising from the Bentara oil field FDP to be $67.2 million. This value is realised through the recovery of past and future costs which are cash reimbursements through the revenue stream and contract cost recovery, subject to substantiation. The equity accounting P&L effect of BCP for ROC has been included in the assessment of the recoverable value at Dec. 31, 2013; any changes to this recoverable value in the future will result in a P&L impact.
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