18th Mar 2008 13:28
Sound Oil PLC18 March 2008 18 March 2008 Sound Oil plc Citarum Production Sharing Contract, Java, Indonesia Sound Oil plc announces that it has served default notices, through itssubsidiary Mitra Energia Citarum Ltd ("Mitra"), to its partners in the CitarumProduction Sharing Contract ("PSC") in respect of unpaid cash calls totalingUS$5.9 million. The defaulting parties are the Operator, Bumi Parahyangan Ranhill Energia Citarum Pte. Ltd.("BPREC") and Bumi Parahyangan Energi Pte. Ltd. ("BPE"). BPREC has a 60% participating interest in the PSC and is in default forUS$4,398,148. BPE has a 20% participating interest and is in default forUS$1,466,049. Mitra has a 20% participating interest. The default took effect at midnight 17th March 2008. If after 60 days thedefaulting parties have not cured their default in all respects, they willforfeit their participating interest to the non-defaulting party. Since BPREC isthe Operator and is in default, Mitra as the only non-defaulting party hasassumed the interim Operatorship function under the terms of the Joint OperatingAgreement. During the default period, the defaulting parties have no vote at theOperating Committee and no right to attend Operating Committee meetings. Mitraas the non-defaulting party is required to pay all outstanding cash calls and asthe interim Operator, to settle outstanding invoices with contractors and otherthird parties. In order to cure their default, the defaulting parties arerequired to pay to the non-defaulting party their share of any such outstandingcash calls. All such reimbursements are subject to interest at the monthly LIBORdollar rate plus 5%. Commenting on the above Gerry Orbell, Sound Oil Chairman said: "Sound has been very sympathetic and understanding to the difficulties faced byits partners in paying their share of the Citarum cash calls. The majority ofthese calls relate to contractors who are claiming money for services suppliedin drilling last year's Pasundan well. We undertook this serious action ofdefault only after other alternatives which had been under negotiation were notrealized, and when it was evident that the approved seismic work programme for2008 was not occurring because of unpaid cash calls by the defaulting parties.We intend to work with partners and contractors to resolve this situationamicably while at the same time protecting our shareholders' interests throughour rights of first refusal under the Joint Operating Agreement, in respect ofany transfer of BPREC's and/or BPE's participating interest. As a result of thepotential increased financial exposure relating to this default, Sound is makinga strategic review of its assets". Notes to the press release: a) The Citarum Production Sharing Contract is an exploration area of over 4000sq km, situated to the south and east of Jakarta, Java. The Pasundan 1 well wasdrilled between 9th May and 27th September 2007. b) The Citarum PSC was awarded on 7th October 2005 to Bumi Parahyangan RanhillEnergia Citarum Pte Ltd ("BPREC") 100%. This company was originally owned byWest Java Energy Pte Ltd. 60% (a Ranhill Bhd 100% subsidiary); by Mitra 20% (aSound Oil 100% subsidiary); and by BPE 20%. In February 2008 BPMIGAS approvedthe withdrawal of BPE and Mitra from BPREC. BPE and Mitra now hold a directparticipating interest in the PSC of 20% each and BPREC holds the 60% balance.BPREC is now entirely owned by West Java an affiliate of Ranhill Berhad. BPE andMitra do not retain any residual rights or liabilities in BPREC. For further information please contact: Sound Oil Gerry Orbell, Chairman 07903 861 145 Smith & Williamson Corporate Finance Limited 020 7131 4000Azhic BasirovDavid Jones Buchanan Communications 020 7466 5000Tim ThompsonNick Melson This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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