Tap Oil Limited provides the following update on the Manora oil development project in the Northern Gulf of Thailand (TAP 30% interest).
Mubadala Petroleum, the Operator of the Manora joint venture, has provided preliminary advice of an approximately 13% expected cost increase on the Manora oil development project from the cost forecast at Final Investment Decision (FID) in July 2012.
The total overall project cost of US$246 million (gross and including contingency) forecast at FID has increased to US$278 million (with a reduced contingency); a US$32 million (gross) increase.
For Tap, this represents an additional cost of US$9.6 million over the US$87 million announced at FID.
Mubadala Petroleum has indicated that it expects first production at the Manora oil development during mid 2014. The Manora oil development is still expected to ramp up to an estimated peak production rate of 15,000 barrels of oil per day (bopd) from 10 production wells and five injection wells.
Tap said it understands that the factors contributing to the revised cost and schedule estimates include further engineering work, procurement delays, growth in project scope, required design changes and increased cost of construction related to the offshore platform component.
Tap intends to fund its share of the development, including the forecast increases, from cash reserves, future cashflows and currently undrawn debt facilities. In March 2013, Tap executed a US$50 million field development facility and an A$20 million corporate facility to finance the Manora oil development with the Commonwealth Bank of Australia. The A$20 million corporate facility is split between a A$10 million revolving facility available for general corporate purposes and A$10 million as a contingency for any Manora oil development cost overruns.
Tap has booked 2P reserves of 6.1 mmbbls (net to Tap) for Manora (20.2 mmbbls gross). Tap expects ultimate recovery from the Manora oil development of 31.1 mmbbls gross (9.3 mmbbls net to Tap). Tap expects the remaining 3.2 mmbbls of 2C contingent resource will become 2P reserves as the production history confirms the higher recovery factor modelled using the water flood simulation.
Tap’s Managing Director/CEO, Troy Hayden said:
“Manora remains a robust project with strong future cashflows. We remain confident that Manora will reposition Tap back to being a significant mid-tier producer within 12 months. With the increase in the expected ultimate recovery from Manora to 9.3 mmbbls (net to Tap), the project is expected to generate significant future cashflows for Tap.”
Press Release, August 26, 2013