Paladin Acquires Further Interest in Ross Field
Paladin subsidiary, Paladin Expro, has entered into conditional agreements with LASMO (ULX) Limited, AGIP (UKCS) Limited and Monument Exploration and Production Limited (together 'AGIP'), under which Expro will acquire AGIP's 16.33 percent fixed unitized interest in the Ross Field in the UK Central North Sea. In addition, Expro will acquire AGIP's interests in acreage adjacent to the Ross Field, which includes the Phoenix and West Wick discoveries, subject to existing joint venture partners' pre-emptive rights. As a result of this transaction, Expro's interest in the Ross Field will increase to 30.82 per cent. Reference to this transaction was set out in the prospectus published by the Company on 12 December 2002 in connection with the proposed acquisition of a portfolio of North Sea assets from BP and Amerada Hess.
The total consideration is US$18.5 million in cash, subject to adjustments for working capital as at the effective date of 31 December 2002 and for cash flow movements and interest between the effective date and completion. The consideration will be satisfied from the Company's existing bank facilities.
The Ross Field was developed using the 'Bleo Holm' Floating, Production, Storage and Offloading Facility ('FPSO') and was brought on stream in 1999. The field is currently producing approximately 9,000 barrels of oil per day ('bopd'), with production forecast to continue until 2011.
The nearby Blake Field, in which Paladin holds a 2.4 per cent interest, also produces through the 'Bleo Holm' FPSO, at a current rate of approximately 44,000 bopd. As a result of the commercial agreements between the Blake and Ross Field partners, Paladin will receive significant tariff income from Blake Field production as a partner in the Ross Field.
On completion of the transaction the Group's production will rise from approximately 38,000 bopd to approximately 40,000 bopd. Proven and probable reserves to be booked will be approximately 3.3 million barrels of oil equivalent.
Completion, which is subject to the approval of the UK regulatory authorities, is expected to take place in the first quarter of 2003.
Paladin also announces that it has reached agreement with YPF Indonesia Limited ('YPF'), a wholly owned subsidiary of Repsol S.A., to settle legal proceedings in Dallas, Texas in which Paladin was alleging breach by YPF of the provisions of an area of mutual interest clause in the joint operating agreement for the South East Sumatra Production Sharing Contract. Under the terms of the settlement agreement, Paladin has received US$9 million from YPF and is in the process of dismissing the proceedings.
Roy Franklin, Chief Executive of Paladin, commented:
'The acquisition of AGIP's interest in Ross not only consolidates our position in the field, but also increases our exposure to the potential upside in the Blake Field through the tariffing arrangements that are in place. This acquisition and the out-of-court settlement with Repsol complete a very successful year in Paladin's development.'