CALGARY, ALBERTA--(Marketwired - Aug. 30, 2013) - Niko Resources Ltd. ("Niko" or the "Company") (NKO.TO) is pleased to provide the following updates:
Farm-outs, Non-core Asset Dispositions, and Other Arrangements Update
Niko is pleased to announce that it has executed two sets of agreements which, subject to the required government approvals, will provide proceeds of nearly $40 million.
Farm-out of Grand Prix PSC in Madagascar
Niko has signed a definitive farm-out agreement under which OMV, an integrated international oil and gas company, will earn a 40% interest in the Grand Prix PSC in Madagascar, with Niko retaining a 35% working interest. Closing of the deal is subject to the approval of the Government of Madagascar.
Other Arrangements for Semai V and Kofiau PSCs in Indonesia
Niko has also signed a definitive agreement with Hess Corporation for certain consideration in exchange for assuming a 100% interest in the Semai V PSC, located offshore Papua province in eastern Indonesia. Two wells have been previously drilled in the block, Andalan 1 and 2, with one future commitment well yet to be drilled. Drilling results from these wells indicate hydrocarbon potential remaining on the block. The Company also signed an agreement to increase its working interest (effective prior to the drilling of the Elit-1 well discussed below) to 100% in the Kofiau PSC, also located offshore Papua province, for nominal consideration. The closings of these transactions are subject to the approval of the Government of Indonesia.
Indonesia Exploration Updates
The Elit-1 well, located in the Kofiau PSC offshore Papua province in eastern Indonesia, has been drilled in water depth of 1,335 feet to a total depth of 3,915 feet in 9 days by Diamond Offshore's Ocean Monarch drilling rig, under budget and ahead of schedule. The well encountered 10 feet of gas at the top of a 90 foot sand package and has been plugged and abandoned.
Pending the Company's re-evaluation of its go-forward exploration capital spending priorities, the Company has decided to temporarily suspend its drilling program in Indonesia. The Company is working on various options to drill for third parties or to assign the contract for the Ocean Monarch rig and related service contracts to third parties for an extended period of time. The Ocean Monarch is being mobilized to the Makassar Strait area until the decision on the next drilling location has been finalized.
The Company is continuing its discussions with its credit facility syndicate banks regarding the re-determination of the borrowing base under its credit facility and is working with the banks on a deferral to September 30, 2013 for the re-determination date and a deferral to October 31, 2013 for any required adjustment to outstanding borrowings to reflect the new borrowing base.
Potential Refinancing of the Credit Facility
The Company is working on options to potentially refinance its credit facility to provide increased funding for its future capital programs.
Certain statements in this press release constitute forward-looking information. Specifically, this press release contains forward looking information relating to various governmental approvals, proceeds from various agreements, the Company's working interest in various PSCs, the re-determination of the Company's borrowing base under the credit facility and the re-financing of the Company's credit facility. These forward looking statements are based on certain key expectations and assumptions of management, including anticipated market conditions. The reader is cautioned that the assumptions used in the preparation of such forward looking information, although considered reasonable at the time of preparation, may prove to be incorrect and there can be no assurance that the expected proceeds from agreements will occur or occur on terms acceptable to the Company. Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors and such variations may be material. Such factors include, but are not limited to: risks associated with market conditions; risks associated with oil and gas operations including equipment failures or accidents; the ability of suppliers and third party contractors to meet commitments; pressure or irregularities in geological formations; and adverse weather conditions. Niko makes no representation that the actual results achieved during the forecast period will be the same in whole or in part as those forecast.