Interra owns 60% of Goldpetrol JOC Inc. ("Goldpetrol") which has a 100% interest in two Improved Petroleum Recovery ("IPR") contracts with the Myanma Oil and Gas Enterprise ("MOGE") in respect of the Chauk and Yenangyaung oil fields in Myanmar. The contracts last for 20 years and will expire in 2017. Goldpetrol is the operator of the fields.
In October 2006, it was announced that Interra and its 40% partner in Goldpetrol, Geopetrol Singu Inc. ("Geopetrol"), had decided to undertake a drilling program to drill 3 deep wells to test the most prospective locations in the existing producing areas and also various exploration prospects and leads.
Discussions have been held with MOGE and the Ministry of Energy in Myanmar regarding the drilling program in the context of payment of outstanding accounts receivable due to Goldpetrol by MOGE. As at the date of this announcement, the amount due to Goldpetrol is approximately US$6.74 million representing 11 months' invoices. Interra's 60% share amounts to US$4.04 million. As a result, Interra and Geopetrol have suspended implementation of the proposed drilling program due to the uncertainty regarding the timing of payment of accounts receivable by MOGE.
Interra and Geopetrol have advised MOGE and the Ministry of Energy that they would reconsider the drilling program in Myanmar as soon as the accounts receivable arrears issue is resolved.
As detailed in our 2005 Annual Report, investors should be aware that the Company's operations and earnings have been, and in future may be, affected from time to time in varying degrees by political developments and changes to the prevailing laws and regulations in Myanmar. It is not possible to quantify the likelihood or overall effect on the Company of such changes, if any.
Interra Resources Limited is a Singapore-listed company specializing in the upstream petroleum business. Our core focus is petroleum production, field development and low-risk exploration. We are positioning ourselves to be a leading regional producer of oil and gas.
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