A legal battle is brewing over the financial information provided to Parliament last week about payment made to attorneys by the Ministry of the Attorney General for legal and other technical/profe
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BG Group chairman: T&T’s Block 5(c) key to LNG business
In one of his first public comments as interim executive chairman of the London-headquartered BG Group, Andrew Frederick James Gould has underscored the importance of T&T’s Block 5(c) to the company. “We sold a 25 per cent interest in four of our ten Barreirinhas Basin blocks in Brazil, and in Trinidad and Tobago, we acquired the remaining 25 per cent interest in Block 5(c) in the Greater Dolphin Area, which is an important long-term supply source for our LNG busines,” he said in a May 1 conference call. The BG Group agreed to buy Niko’s 25 per cent interest in the block for US$62 million. Ironically, the BG Group started out as a minority interest holder in the block.
Canadian oil and gas company Niko Resources Ltd announced on March 31 that it had executed a definitive sale and purchase agreement for sale of its 25 per cent interest in Block 5(c) to a subsidiary of the BG Group, 75 per cent interest owner and operator of the block, for gross proceeds of US$62 million. Under the terms of the agreement, a deposit for a portion of the sales price was to be paid to Niko in early Apri. Closing of the transaction is subject to the Government of T&T, other conditions customary for transactions of this nature, and closing adjustments, Niko said. Upon closing of the transaction, under the settlement agreement entered into in December 2013 with Diamond Offshore, a specified portion of the proceeds will be used to reduce the company’s outstanding obligation to Diamond. In addition, under the terms of the company’s term loan facilities agreement, $20 million of the proceeds will be used by the company to fully repay debts. “In November 2013, we announced our restructuring plans for the company and in December, we closed on a comprehensive financing package.
The sale of our interest in Block 5(c) is another important step in our plans and we look forward to further progress as we move through the year,” Niko president Jake Brace said. In 2007, the BG Group signed a farm-in agreement for Block 5(c), 94 kilometres off the east coast of Trinidad. BG Group took a 30 per cent working interest in the production sharing contract (PSC) and assumed operatorship in 2009. Also in that year, the BG Group exercised its pre-emption rights under the Joint Operating Agreement to increase its stake in the block to 75 per cent, which became effective later that year. Each of the three wells drilled on Block 5(c) since 2007 have encountered hydrocarbons and has been successfully tested. The first well, Victory-1, was drilled 10 kilometres north-east of the Dolphin platform. The second well, Bounty-1, targeted a separate prospect, approximately four kilometres away from the Victory-1 well. Drilling and testing of the third exploration well, Endeavour-1, was completed in 2009. The well targeted the same reservoir section as Bounty-1 but on a separate structure, approximately nine kilometres north-west of the Bounty-1 discovery. The BG Group has said an appraisal drilling programme is proposed to commence in 2014.