Karoon Says PEPC's Restructuring Not Likely to Impact Brazil Work Program

Karoon Gas Australia Ltd. provided Thursday an update on recent events relating to its 65 percent owned Santos Basin Blocks S-M-1037, 1101, 1102, 1165 & 1166 offshore Brazil.

Karoon's 35 percent joint venture partner, Pacific Exploration and Production Corp. (Pacific) announced April 27 that it and certain of its direct and indirect subsidiaries filed an application for protection under the Companies' Creditors Arrangement Act with the Superior Court of Justice in Ontario, Canada. The application for protection allows Pacific the opportunity to proceed with a comprehensive financial restructuring agreement (restructuring transaction) with The Catalyst Capital Group Inc., certain senior unsecured noteholders and certain lenders under its credit facilities.

Pacific has announced: "All operations of the Company's subsidiaries (the Pacific Group) are expected to continue as normal throughout this process. Importantly, the Company expects regular payments will be made to all of the Pacific Group's suppliers, trade partners, and contractors across the jurisdictions in which it operates in accordance with local regulations. Additionally, employees will continue to be paid throughout this process, without disruption."

An initial order has been obtained by Pacific from the Superior Court of Justice which:

  • authorizes Pacific to commence a Court-supervised restructuring process
  • provides protection to allow normal operations to continue; and
  • approves $500 million debtor-in-possession financing facility and a $134 million letter of credit facility

Karoon's Managing Director, Robert Hosking said "while it is unfortunate the depressed oil price environment has forced the parent company of our JV partner into this situation, at this stage Karoon has no reason to believe our current JV work program in the Santos Basin, Brazil will be impacted."

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