PA Resources and EnQuest terminate farm out agreements - PA Resources postpones release of Year End Report
In May 2013 PA Resources and EnQuest signed Sale and Purchase Agreements for the transfer of 70% interest in each of the Didon producing oil field and the Zarat Permit to EnQuest. In July 2014, PA and EnQuest completed the Didon transaction with the remuneration retained in escrow awaiting a letter of non-objection from the Tunisian authorities. Despite repeated verbal assurances from the Tunisian authorities that such a letter was imminent, none has yet been issued. The back-stop date of 31 January has now passed and the Didon transaction has been reversed. The $23 million held in escrow has been returned to EnQuest and PA Resources is 100% owner of the Didon concession. As a consequence, the transaction in respect of the Zarat Permit also terminated on 31st January
The collapse in world oil prices has meant that Didon is currently cash flow negative and this situation will worsen as wells decline until a campaign of infill drilling can be undertaken, which will require a substantial investment in the field. PA Resources is currently looking at alternatives for reducing the negative cash flow from Didon, including shutting the field in until oil prices recover. The results of the Didon option planning will be shared with the company’s creditors in the context of the current refinancing negotiations.
The Zarat discovery is the largest undeveloped hydrocarbon discovery in Tunisia and its development is important to offset the decline of indigenous gas production in the country. Over the last year, PA has worked closely with ETAP in developing a Plan of Development for Zarat that meets the country’s gas needs while dealing with the large quantities of carbon dioxide in an environmentally sustainable manner. The Plan of Development is now largely complete and PA will continue to progress the Zarat Field development including examining alternative ways of funding the development.
The Board of PA Resources has decided to delay publication of the year-end report until 26 February, at which time the termination of the transactions with EnQuest will be reflected.
Stockholm 02 February, 2015
PA Resources AB (publ)
For additional information, please contact:
Tomas Hedström, Chief Financial Officer
Phone: +46 8 545 211 50
E-mail: ir@paresources.se
PA Resources AB (publ) is an international oil and gas group which conducts exploration, development and production of oil and gas assets. The Group operates in Tunisia, Republic of Congo (Brazzaville), Equatorial Guinea, United Kingdom, Denmark, Netherlands and Germany. PA Resources is producing oil in West Africa and North Africa. The parent company is located in Stockholm, Sweden. PA Resources’ net sales amounted to SEK 1,049 million in 2013. The share is listed on the NASDAQ OMX in Stockholm, Sweden. For additional information, please visit www.paresources.se.
The above information has been made public in accordance with the Securities Market Act and/or the Financial Instruments Trading Act. The information was published at 08:30 am CET on 02 February 2015.