KrisEnergy, Cambodia near new terms for block A

KrisEnergy, Cambodia near new terms for block A

KrisEnergy will soon sign a revised 2002 production-sharing contract with
Cambodia to develop the country's block A, according to a Reuters report.

Meng Saktheara, a secretary of state at the Ministry for Mines and Energy,
told the news service that "[t]here will be an agreement signed in March."

Block A is located in the Khmer basin in the Cambodian sector of the Gulf of
Thailand and contains the Apsara oil field, said to be the country's only
confirmed discovery. KrisEnergy now holds 95% of the block with the
remaining 5% transferred to the Cambodian Ministry of Mines and Energy.

Authorities had approved the transfer of 28% and 14.25%, from Mitsui Oil
Exploration Co. Ltd. and GS Energy Corp., respectively, to KrisEnergy in
October 2016.

A November 2016 report from The Phnom Penh Post said Saktheara believed that
the new ownership structure will allow the development to move forward, as a
"stalemate" had developed between the previous three partners.

"The big news is that KrisEnergy now has the whole block and the other
companies that got in the way are no longer there," Sakthear told the Post.
"This allows them to move forward with the project, but all the
responsibility now rests on their shoulders."

Cambodia's hope is that the field could finally bring its first oil after
many years of delay.

Reuters reports that the country has struggled to develop oil fields in the
Gulf of Thailand, with few companies willing to invest in the area since the
oil price crisis.

However, in KrisEnergy's 2016 results, Jeffrey S. MacDonald, executive
director and interim CEO, named the country as an area of particular
interest in its new business plan.

"Pursuant to the new business plan, we intend to increase our operational
focus on development and production activities in the Gulf of Thailand,
including Cambodia. The Gulf of Thailand is an area of particular expertise
for the group and we operate three concessions containing near-term oil
developments, thereby giving us control in terms of timing, development
concept, and allocation of capital.

"Specifically, we intend to concentrate on the further development of the
G10/48 Wassana oil field, and development of G6/48 and Cambodia block A oil
fields, all of which are operated by KrisEnergy, and all of which have
multiple low-risk development opportunities with significant exploration
upside. These developments will be core to our strategy in order to generate
free cash flow from operations and provide for the repayment of our debt
obligations beginning in 2022," it said in the report.

The company continued by noting that it would consider selling stake in
Cambodia block A and the G10/48 Wassana field in Thailand to generate free
cash flow and allow for repayment of debt obligations in 2022. The company
posted a net loss after tax of more than $237 million for the 2016 fiscal
year, over $48.7 million in 2015. This was despite the fact that the
company's revenue more than doubled year-over-year, from $60.2 million in
2015 to $140.2 million in 2016. It also proposed a restructuring plan in
November 2016.

KrisEnergy acquired the block A operatorship when it bought Chevron Overseas
Cambodia Ltd.'s 30% stake. It originally farmed into the block in 2010.

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Link to Original Article:
http://www.offshore-mag.com/articles/2017/03/report-krisenergy-cambodia-near
-new-terms-for-block-a.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com