Cambodia: KrisEnergy ups stake to unclog offshore Block A oil

Cambodia: KrisEnergy ups stake to unclog offshore Block A oil

Singapore-listed KrisEnergy Ltd has upped its stake in the Block A offshore
oil field to 95 percent, acquiring the shares of two minority stakeholders
who had opposed the Cambodian government's attempts to renegotiate a
revenue-sharing model, the company revealed in its third-quarter filings.

The document, released yesterday, shows that Japanese-backed MOECO Cambodia
Co Ltd and South Korea's GS Energy Corporation transferred their shares in
Block A to KrisEnergy in early October for an undisclosed sum. MOECO
previously held a 28.5 percent stake in the block, while GS Energy held
14.25 percent.

The share transfer gives KrisEnergy full ownership of Block A, which covers
4,709 square kilometres in the Gulf of Thailand and contains the Apsara
field, Cambodia's only confirmed oil discovery. However, the Cambodian
government reserves the right to exercise its 5 percent option.

Meng Saktheara, secretary of state at the Ministry of Mines and Energy
(MME), said he expects the revised ownership structure to end the stalemate
that has hindered progress in developing the block's oil resources.

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

The "finger pointing" excuse was no longer valid, he added.

KrisEnergy farmed into Block A in 2010, and increased its participation in
2014 by purchasing the departing stake of energy giant Chevron, to become
the majority shareholder. The company has already submitted development
plans to the government and reached an agreement on its fiscal and technical
terms.

However, according to Saktheara, the development plans were held up by the
two minority stakeholders in the block, who refused to accept a revised
revenue-sharing agreement, claiming the government had to abide by the
original deal it signed with Chevron and MOECO in 2002.

With KrisEnergy now fully in control, Saktheara said that progress could
resume and the company was still on course to begin oil production by 2018
at the earliest. However, KrisEnergy would still have to prove that it had
adequate financial resources before it would be allowed to begin operations.

"We need to make sure they can secure enough financing to continue to pursue
this project, as well as finalising with us our revenue-sharing deal," he
said.

While KrisEnergy still holds $37 million in unused liquidity, the company
struggled during the third quarter as oil prices remained low, according to
its financial statements.

KrisEnergy reported a loss of $31.6 million for the three-month period
compared to $9.3 million in profit for the same time last year, despite
revenue tripling to $44 million on the back of a 68 percent production
increase from the existing oil fields it holds.

"Although we saw a slight improvement in market conditions in the third
quarter from the first half of 2016, the oil and gas environment remains
challenging. Oil prices in the fourth quarter to date have been on a
slightly firmer footing but sentiment is uncertain," interim CEO Jeffrey
MacDonald said in the filing.

The company noted that while it had taken necessary steps to reduce costs
and capital expenditure this year to the "bare minimum", it would stay true
to an overall growth plan.

"We are implementing major changes to our existing operational strategy and
our financial structure to ensure the viability of the company," said
MacDonald. "The primary operational change will be an increased focus on
development and production in the Gulf of Thailand in both Thailand and
Cambodia."

In a separate filing yesterday to the Singapore Stock Exchange (SGX)
yesterday, KrisEnergy announced that it would issue new bonds in hopes of
raising an additional $100 million to help keep the company afloat. Keppel
Corporation Ltd, a Singaporean oil rig manufacturer that already holds a 40
percent share in KrisEnergy, has announced that it intends to buy the bonds.

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Ref:
http://www.phnompenhpost.com/business/krisenergy-ups-stake-unclog-offshore-b
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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com