Kairiki Energy Farms-Out Stake in SC 54
Kairiki Energy is pleased to advise that its wholly owned subsidiary, Yilgarn Petroleum Philippines Pty Ltd, has executed a formal Farm-Out Agreement with Focus Oil and Gas SC54 Pte Ltd, a wholly owned subsidiary of Focus Oil and Gas Pte Ltd (Focus), pursuant to its previously announced Letter Agreement. Focus is a private oil and gas investment company, headquartered in Singapore.
The Farm-Out Agreement has been entered into on terms consistent with those previously announced. Completion of the Farm-Out Agreement is conditional upon Focus concluding financing arrangements with its investors by June 2, 2009. Once these finance arrangements are concluded, Focus will pay Kairiki US $7 million and fund the next US $6 million of Kairiki's share of the Service Contract (SC) 54A work program (equivalent to a carry for Kairiki over the next US $26 million of work program in SC 54A).
This results in a total consideration of US $13 million payable to Kairiki for a 17% interest in the inboard portion of SC 54. In addition, the Farm-Out is conditional upon obtaining all necessary joint venture, regulatory and relevant government approvals.
Mr. Laurie Brown, Kairiki's Managing Director, stated, "This is a landmark deal for Kairiki. We are extremely pleased to have executed a formal farm-out agreement with Focus, a strategic partner of choice, as we embark together on maturing our inboard portfolio to deliver a production-led revenue stream in the near-term; a key goal in Kairiki’s transformation into an E&P company. In parallel with execution of the formal farm-out agreement with Focus, we have also made significant progress towards obtaining the necessary joint venture approvals. We look forward to updating the market as this transaction proceeds."
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