TAP OIL will pay US$5 million of the disputed US$9.1 million for the settlement of the final capital costs of the Manora field facilities.
The payment is part of an agreement with Mubadala Petroleum, the operator of the Manora oil development, which is located in the Gulf of Thailand.
In March 2015, Tap announced an unexpected capital expenditure increase of US$28 million (US$8.4 million Tap share) for the construction of the Manora Oil facilities.
Increased expenditure was a result of delays in hookup, commissioning and contractor claims, according to the company.
Tap has agreed to pay US$5 million of the final disputed amount of US$9.1 million as the final balance of the Manora oil development facilities capital expenditure.
Payment will be made in two equal instalments, with the first payment on 30 September 2016 and the final instalment on 31 December 2016.
Tap advised its financial statements at 30 June 2015 reflected a carrying value for the Manora oil development of US$105.7 million.
The settlement agreement will result in a further US$5 million being included in the carrying value before any impairment testing at 31 December 2015.
The finalisation of the facilities costs and the elimination of exposure to any further related costs or claims provides Tap and its lenders with greater certainty around the value of Manora, Tap said.
As part of the agreement, Tap also has extended time to pay US$5 million of cash calls which will now be paid in equal instalments on 31 March 2016 and 30 June 2016.
Tap managing director Troy Hayden was pleased to reach an agreement.
“The payment terms and confirmation there will be no further facilities capital costs to be paid by Tap, provide Tap and its lenders with certainty and financial clarity, a critical element given current market conditions.”
Tap holds a 30 per cent interest in the G1/48 concession in the northern Gulf of Thailand where the Manora oil development is producing.
In its December 2015 quarterly report, Tap reported Manora is producing from seven wells, with gross production for the quarter at 1.18 million stock tank barrels.
During the quarter water injection continued into four wells.
Tap said all reservoirs which have been injected with water have shown stabilised reservoir pressure, demonstrating the benefit of water injection.
Tap reported nine cargo lifting during the quarter.
On 28 December 2015, Tap’s withdrawal from its 30% participating interest in G3/48 concession was officially approved by the minister of energy for Thailand.