Australia-listed Tap Oil Limited provided Thursday the following update on its commercial relations with the Thai entrepreneur, Chatchai Yenbamroong, and his Northern Gulf companies.
2P Reserves Deferred Payment
As previously disclosed, the 2P reserves deferred payment is a staged acquisition payment that was agreed with Northern Gulf Petroleum Holdings Limited (NGPH) and its subsidiary, Northern Gulf Petroleum Pte. Ltd (NGP) when Tap acquired its 30 percent interest in the G1/48 concession in October 2010.
The first of these staged acquisition payments is based on the joint venture 2P reserves estimate for the Manora oil field as at Dec. 31, 2014.
The Operator (Mubadala Petroleum) has now advised that a report compiled by Netherland, Sewell & Associates, Inc (NSAI) containing the 2P reserves estimate as at Dec. 31, 2014 is complete. The NSAI report estimates the Dec. 31, 2014 2P gross reserves at 15.5 million stock tank barrels (MMstb) (net to Tap 4.648 MMstb). Importantly, this report was compiled by NSAI on the basis of the drilling results of the Manora wells to Dec. 31, 2014, and does not include the results of the wells drilled during 1Q 2015. The reserves payment is based on the economic ultimate recovery which is reserves at a certain date plus production to that date. Production to Dec. 31, 2014 was 0.481 MMstb thus the reserves payment is based on 15.97 MMstb.
On the basis of this report, Tap calculates the 2P reserves payment owing to NGPH to be $1.31 million. Tap notes that NGPH has the option to request a further reserves certification by an independent expert (at its cost). Tap will provide a further update if it receives a notice from NGPH requiring the appointment of an independent expert. Otherwise, Tap has 30 days to satisfy this payment obligation to NGPH.
On April 23, Tap released its own estimate of Manora reserves and contingent resources as at Dec. 31, 2014, incorporating all development well data up to March 31, of 19.3 MMstb (100 percent for field). Tap’s estimate assumes two additional development wells will be required in the following 18 to 24 month period. After considering the Dec. 31, 2014 reserves report completed by NSAI and the well data from the drilling in 1Q 2015, Tap does not intend to make any changes to its 2P reserves. The Tap technical team and NSAI both agree that the estimation of reserves at the midpoint of a development drilling program and with less than 2 months of production data is problematic.
Tap notes that the Borrowing Base Debt Facility with BNP Paribas and Siam Commercial Bank is sized on the banks’ 1P reserves estimate. The NSAI 2P reserves estimate as at Dec. 31, 2014 does not affect the Borrowing Base Debt Facility.
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