Key Acquisition Gives Forum First Production

Forum Energy has expanded its asset base in the Phillippines by acquiring interests in nine offshore oil fields and additional exploration prospects. The acquisition comes with Forum's takeover of Basic Petroleum and Mining, Inc. (BPMI), formerly held by Philippines-based Basic Consolidated.

"This acquisition represents an exceptional opportunity for us to increase shareholder value," said David Robinson, Forum's chief executive. "We are starting with around 40 barrels of output a day, but with considerable potential to boost production."

The newly-acquired assets cover nine offshore fields west of the Philippines, comprising: Nido (8.47 percent), Matinloc and Pandan (12.41 percent), North Matinloc (19.46 percent), Libro (28.6 percent), Tara (10 percent), Bonita (7.03 percent), West Linapacan (9.1 percent), Galoc (2.28 percent), and a 27.7-percent interest in SC41. SC41, situated within the Sulu Sea, covers some 4,820 square kilometers and lies in an area with proven hydrocarbon potential. Forum's team in Manila will manage project work.

The Nido and Matinloc fields have been producing since the early 1980s in 40 meters of water, achieving peak production of 50,000 barrels per day (b/d) together and currently producing about 1,000 b/d. Remaining proved and probable reserves in the two fields, and nearby Galoc (currently under development), have been independently estimated at more than 8.6 million barrels, with considerable upside potential both in these fields and the others where interests have now been acquired.

Forum will pay US$5 million over the next 12 months in a combination of cash and shares to acquire 100 percent of BPMI. Further cash payments of up to $2 million will become available if the acquired interests produce more than 5.4 million barrels of oil. BCI may also progressively receive cost recovery of up to $10 million, but not until Forum has recovered 100 percent of its invested capital.

Forum’s existing assets, all in the Philippines, include the highly promising Sampaguita gas discovery within the GSEC101 (Reed Bank) offshore license area, and the SC40 (Cebu) license with known onshore and offshore gas and oil discoveries, where the Libertad gas field was recently declared commercial.

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