US$10 million Facility Agreement and Service Contract 72 Work Programme Update
November 24 2010
The Board of Forum is pleased to announce that Forum Philippines Holdings Ltd (“Forum Philippines”), a wholly owned subsidiary of the Company has today entered into a US$10m Facility Agreement (“the Facility”) with the Company’s principal shareholder, Philex Mining Corporation (“Philex”).
The Facility will be available for a 3 year period and funds can be borrowed at an interest rate of US LIBOR + 4.5%. The Facility will enable the Company to fund its 70% share of a first sub-phase work programme over Service Contract 72 (“SC72”). Obligations arising from funds drawn under this Facility are not convertible into the Company’s or Forum Philippines’ ordinary shares.
The Company has approved a work programme of which Forum’s share is estimated to cost up to approximately US$7.4 million. This work programme is designed to provide a more comprehensive valuation of the property and identify potential sites for appraisal wells. The work programme includes 3D seismic work over an area of up to 550 Km2 over and around the Sampaguita Gas Discovery, and 2,200 line-Km of high resolution 2D over existing leads within the 8,800 Km2 contract area. The acquisition of the seismic data is currently scheduled to be completed in the first half of 2011 and will then be subject to technical analysis.
In addition to moving ahead with the approved work programme, the Company continues to have discussions with potential strategic partners for the purpose of accelerating the development of SC72, however no firm proposal is currently being considered.
As the Facility has been provided by a substantial shareholder of the Company, this transaction is a related party transaction under the AIM Rules for Companies. The independent directors of the Company consider, having consulted with Execution Noble & Co, that the terms of the Facility are fair and reasonable insofar as the Company's shareholders are concerned.
Andrew Mullins, Executive Director, commented:
“We are delighted to have been able to arrange this US$10 million Facility, on such attractive terms. The Facility will enable the Company to fund its share of this important work programme over SC72. We look forward to releasing further updates as appropriate.”
For further information please contact:
Forum Energy Plc
Andrew Mullins, Tel: +44 (0) 1932 445 344
Execution Noble & Company Ltd (Nominated Adviser & Broker)
Harry Stockdale Tel: +44 (0) 207 456 9191
Notes to Editors:
Service Contract 72 (formerly GSEC101) is an 8,800 Km2 licence located offshore West Palawan, in the South China Sea. Forum Energy Plc (through its 100% interest in Forum Philippines Holdings Ltd and Forum (GSEC101) Ltd) holds a 70% equity interest in the SC72 licence.
In 2006, results from a 248-square kilometre 3D seismic survey over the SC72 licence area indicated mean 3.4 Trillion Cubic Feet (TCF) gas-in-place (GIP) at the Sampaguita Gas Discovery.
Philex Mining Corporation (through its interests in FEC Resources, Inc and Philex Petroleum Corporation) controls 64.45% of the share capital of Forum.