26th Nov 2007 07:59
Crosby Capital Partners Inc26 November 2007 Crosby Capital Partners Inc. (26) November 2007 IB Daiwa Announces the Suspension of Drilling at the Endeavor AMI Prospect Shareholders should be aware that IB Daiwa Corporation ("IB Daiwa" - Jasdaq3587) has today announced the suspension of drilling at the Endeavor AMIprospect. An English translation of the full announcement is available on IBDaiwa's website, www.ibdaiwa.co.jp. A summary is provided below. Crosby owns, through two wholly owned subsidiaries, 86,700,000 shares,representing 20.33% of IB Daiwa's issued share capital. The holdings areclassified as 'financial assets at fair value through profit and loss' and are,therefore, marked-to-market with gains and losses being recognised in the incomestatement. Announcement of the Suspension of Drilling at the Endeavor Prospect IB Daiwa (the "Company") announces that the Pel-Tex SL2038#1 well, which isdrilling on the Endeavor AMI Prospect onshore Louisiana, USA ("the Well"), hasreached a true vertical depth of 19,003 ft (a measured depth of 19,146 ft). Atthis depth the Well has not yet reached its primary target of the Planulinasandstone, which is now expected to be a few hundred feet below the current Wellbottom. Consequently, the JV has agreed to deepen the Well to 20,000ft, and adrilling plan and its associated costs have been approved by the JV. However, it has also been decided to suspend the well at this depth while the JVseeks new insurance coverage for further drilling of the Well beyond the currentdepth. Drilling will resume at a later date when new insurance coverage isobtained. Details of the reasons for the suspension are set out below. 1) Background Since the commencement of the drilling of the Well in November 2006, much timehas been spent handling engineering problems caused by high pressures in theWell. These conditions have led to the drilling of three separate sidetracks,and required that all of the high pressure zones encountered be put behindcasing to maintain well safety. As a result, it is taking much longer to reachthe main target zone than planned. Most of the costs associated with rectifyingthe problems have been recovered under an insurance policy taken out to protectagainst such contingencies. 2) Reason for the decision to suspend the Well On 23rd November 2007 (Local Time), the JV was informed by the insurers who haveprovided cover to date that the insurance of the drilling operations moves ontoa different basis below the current depth of the Well. Negotiations with theinsurers have since been on-going and at this stage it has not yet been possibleto negotiate appropriate arrangements with the insurers. Both IB Daiwa andLodore have a corporate policy of not drilling a well unless insured againstloss of well control, and the potential liabilities arising from consequentialdamage to life, the environment and property. The decision has therefore been made to suspend the Well, whereby it is pluggedand made safe, and leave it in a state of readiness for the resumption ofdrilling, once new insurance arrangements have been made. It is not possible toestimate at this stage how long it may take before the Well can be re-entered.This will principally depend upon the resolution of the insurance cover, and thecontracting of a new rig, but directors regret to advise that a delay of atleast several months must be anticipated. 3) Impact to the current year fiscal year forecast The result of the drilling of the Well will have a material financial impact tothe Company, as explained in detail in "FY2007 H1 Financial Results" dated 15November 2007. At this stage, it is not possible to say whether the result ofthe drilling becomes available before the filing of the current fiscal yearfinancial report so that the financial impact of the drilling can be included inthis fiscal year financial results or it will be included in later fiscalperiod. As such, the Company keeps the net profit forecast for the currentfiscal year in two cases depending on the result of the drilling (the low caseprovides for extraordinary losses to be recognised in case the drilling is afailure; the base case assumes the drilling is a success or the result of thedrilling is not made available before the filing of the current fiscal yearfinancial report, and does not provide for such losses), and there is norevision to the current fiscal year forecast arising from the suspension of theWell. . ABOUT CROSBY CAPITAL PARTNERS Crosby Capital Partners Inc. is a leading independent deal-focused Asia-orientedmerchant banking and asset management group. Crosby is quoted on the AIMmarket of the London Stock Exchange. Further details can be found on theCompany's website www.crosby.com. For further information on Crosby please contact: Steve Fletcher, Chief Operating Officer on +44 20 7590 2800 Ends This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ZOL.L