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Carnarvon Completes Sale of Part of its Stake in 3 Concessions in Thailand

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Carnarvon Petroleum Limited (Carnarvon) announced Thursday that the sale of half of it’s 40 percent interest in the L44/43, L33/43 and SW1 Concessions in Thailand has been completed, under the terms of the Sale and Purchase Agreement (SPA) announced to the market March 3.

The cash consideration of $33 million has been received and Carnarvon will receive up to $32 million in future payments based on 12 percent of the buyer’s future field revenues, to a limit of $10 million per annum.

As a result of the completion of the sale and payment of associated transaction costs, Carnarvon’s cash is approximately AUD 50 million.

Carnarvon’s Managing Director and CEO, Adrian Cook said, “We are pleased to welcome Loyz Energy Limited to the joint venture and look forward to building on our relationship even further. The completion of this transaction bolsters our strong balance sheet and enables Carnarvon to focus on the spudding of the Phoenix 1- South well in the North West Shelf, which is anticipated in late May or June this year. Carnarvon retains plenty of upside exposure to the success in our Thailand production assets by virtue of our remaining 20 percent interest in the asset and the revenue stream from future payments as a result of this sale.”

Equity interests in L44/43, L33/43 and SW1

  • ECO Orient (Operator): 60 percent (Before transaction), 60 percent (After Transaction)
  • Carnarvon Petroleum Ltd.: 40 percent (Before transaction), 20 percent (After Transaction)
  • Loyz Oil Thailand Pte Ltd.: - (Before Transaction), 20 percent (After Transaction)

Reserves Revision

A summary of the assessed reserves, as at Dec. 31, 2013, are contained in the following tables and have been updated to reflect the completion of the sale and the change in Carnarvon’s interest in the assets.

  • Table 1 - Gross reserves for the field (100 percent interest)
  • Table 2 - Reserves net to Carnarvon’s current 20 percent working interest following the sale

Table 1: Thailand Asset Reserves as at Dec. 31, 2013 (Reserves Gross [100 percent] Field Volumes)

  • Block L33: 0.29 million barrels (1P*), 0.81 million barrels (2P**), 7.62 million barrels (3P^)
  • Block L44: 6.30 million barrels (1P*), 25.05 million barrels (2P**), 67.51 million barrels (3P^)
  • Block SW1: 1.36 million barrels (1P*), 3.75 million barrels (2P**), 7.37 million barrels (3P^)
  • Total: 7.95 million barrels (1P*), 29.60 million barrels (2P**), 82.49 million barrels (3P^)

Table 2: Thailand Asset Reserves as at December 31st 2013 – Carnarvon Petroleum’s share following sale to Loyz Oil Thailand Pte Ltd. (Reserves Net [20 percent] Field Volumes)

  • Block L33: 0.06 million barrels (1P*), 0.16 million barrels (2P**), 1.52 million barrels (3P^)
  • Block L44: 1.26 million barrels (1P*), 5.01 million barrels (2P**), 13.50 million barrels (3P^)
  • Block SW1: 0.27 million barrels (1P*), 0.75 million barrels (2P**), 1.47 million barrels (3P^)
  • Total: 1.59 million barrels (1P*), 5.92 million barrels (2P**), 16.50 million barrels (3P^)

*Proved Reserves, **Proved and Probable Reserves, ^Proved and Probable and Possible Reserves

Reserves Assessment

On March 31 the Company advised proved reserves were 3.2 million barrels net to Carnarvon and that proved and probable reserves were 11.8 million barrels net to Carnarvon as at Dec. 31, 2013, based on Carnarvon’s 40 percent interest in the assets at that time.

The reserves information contained in this report concerning the SW1, L33/43 and L44/43 fields are summaries of the reports filed by the Company on the ASX March 31 which was released on the relevant date with the written consent of C Chapman, president of Chapman Petroleum Engineering Ltd. Chapman has a Bachelor of Science Degree, is a member of the Australian Mining and Metallurgy and has more than 25 years relevant experience. The Company is not aware of any new information (other than Carnarvon’s reduced interest in the assets) or data that materially affects the information included in the relevant market announcements and confirms that all of the material assumptions and technical parameters underpinning the estimates in the relevant announcements continue to apply and have not materially changed.

There are numerous uncertainties inherent in estimating reserves and resources, and in projecting future production, development expenditures, operating expenses and cash flows. Oil and gas reserve engineering and resource assessment must be recognized as a subjective process of estimating subsurface accumulations of oil and gas that cannot be measured in an exact way, and this is particularly so for the volcanic reservoirs encountered in this area.

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