The US$5 million will be settled as follows:
The settlement is dependent on ministerial consent. All debts to Rift which currently exceed US$5m and future drilling and seismic cost obligations between Austral and Rift have will be cancelled on successful completion of the transaction.
On May 6, Rift disclosed that it was pursuing Austral for its share of exploration costs and that it was seeking to obtain compensation through the New Zealand High Court. The Board of Rift is pleased to have achieved a rapid conclusion to the dispute, enabling the Company to concentrate on drilling and assessing the size of its gas field at Puk Puk-1 part of the Douglas gas discovery area in PNG
"I am delighted that this dispute is behind us and that we now have total control of our gas fields and so can move forward as rapidly as possible," Ian Gowrie-Smith, Chairman of Rift, commented. "The recent dramatic oil and LNG price hikes has led to unprecedented interest in Rift's deposits in PNG, which together with the Company's existing MOU with Rio Tinto Alcan, give us the potential for a very exciting future."
The Douglas discovery was made in May 2006. In March 2007, Rift and its then joint venture partner, Austral Pacific Energy Limited ("Austral"), signed a non-binding memorandum of understanding ("MOU") with Alcan to further investigate the supply of approximately 40 BCF per annum of gas to the Gove Alumina plant in Northern Territory, Australia for a period of 20 years following initial production. Supply is proposed to be via a direct pipeline from the Douglas discovery to Gove, subject to the joint venture establishing sufficient reserves. Under the terms of the tri-partite MOU, the joint venture stated its intention to carry out an active drilling program during the first six months of 2008. As a result of the dissolution of the joint venture with Austral, Rift is now the sole MOU partner with Alcan.
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