CORRE Pens First Contract with BP
Canadian Oil Recovery and Remediation Enterprises Ltd. announced that SAR AS (SAR), a leading Norwegian oil waste management
operating company that has previously entered into a strategic MENA operating partnership with CORRE, has signed a contract to clean and treat drill cuttings for BP Plc. in Jordan. Accordingly, this contract is fully assigned to SAR-CORRE MENA (SCM), CORRE's
MENA operating partnership with SAR.
This contract relates to BP's agreement with Jordan's National Petroleum Company to invest $237 million to explore for natural gas reserves in the Risha field near the border with Iraq. This field covers an area of 7,000 square km and if the exploration leads to the discovery of a larger reserve basin, it is expected the field's production could increase from its current 20 million cubic feet per day to 330 million cubic feet per day by 2015 which is in line with the Jordanian government's strategy for the continued development of this field through a second phase. According to industry sources, BP would invest billions in the second phase.
SCM's contract with BP is currently for two years with an optional one year extension if elected by BP. Including charges for asset mobilization and demobilization, over two years the contract has a value of approximately $7 million increasing to approximately $10 million if a third year is elected. This contract is based on a daily operating fee for days of normal operation and otherwise, a standby rate for non-operating days. However, based on the amount of natural gas reserves evaluated by BP, this contract has the potential to be extended and increased both in term and value.
"We are very pleased with this first contract we have with our operating partner, SAR AS, and with BP," commented John Lorenzo, CORRE's CEO.
"We intend to employ all of our oil services in projects in the Gulf Region to capitalize on the strong business network of our Kuwaiti and Saudi strategic alliances and partners. We are building a Company with our unique line of oil services, supported by our exceptional proprietary technologies and operating processes."
The award of this contract from BP represents SCM's first operating contract and the commencement of the Company's revenue from its MENA operations. SCM is currently mobilizing operating assets and resources into Jordan with operations under the contract expected to start early in the second quarter of 2012. In addition there may be futureopportunities to provide drill cuttings treatment for BP in other regions, including Oman's natural gas reserves.
In addition to the Company's soil remediation and oil recovery service lines, the launch of SCM's operations to clean and treat drill cuttings in Jordan provides the Company with an active MENA footprint for this service and provides a track record the Company can
leverage into the Kuwait and Saudi Arabian markets where CORRE believes it has a competitive advantage through its strategic shareholders and longstanding alliances. CORRE expects that the Kuwait Oil Company (KOC) will release an extensive tender during the second quarter of 2012 for a five-year contract to build and operate a fixed drill cuttings treatment facility in Kuwait. Kuwait is currently enhancing its drilling operations as it moves from approximately 2.5 million barrels per day to over 4 million barrels per day over the next few years. CORRE, through SCM, has already been pre-qualified by KOC and is an approved contractor eligible to bid on this upcoming tender from KOC.
Operates 33 Offshore Rigs
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