Thursday 23rd June 2005

 

‘TSP fields should provide adequate return’

 
 
 
 
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BY ASHA JAVEED

BPTT’s Teak Samaan and Poui (TSP) fields should provide an adequate return on the investment by Neal & Massy Energy and Perenco, its European oil partner, if it is able to extend the life of the field, said stockbroker Peter Clarke.

He said it was an excellent opportunity for Neal & Massy to get into energy in a big way and they chose a recognised and experienced partner.

BpTT announced last week that its TSP fields have been sold conditionally to Neal & Massy Energy and Perenco for the sum of US$229 million ($1.4 billion).

N&M Energy will have a 17-20 per cent equity split with Perenco, if bpTT’s 30 per cent shareholder, Repsol, waives its right to purchase the shares and the Government does not exercise its option to purchase up to 15 per cent of the TSP assets.

Clarke said N&M Energy may have to borrow against what the fields will produce or come up with internally generated funds to meet its commitment of US$46 million ($288 million).

“The nature of the oil fields is that it will produce substantially in the first and second year and the returns will support borrowings,” he said.

However, he noted that the fields are on a decline.

“For example, someone may quote a field as having 200 million barrels but because they don’t have the technology at the time only about 100 million will be recoverable,” he explained.

The TSP fields currently produce about 20,500 barrels a day with a natural decline of 30 per cent, and reserves of about 40 million barrels.

BpTT expects to complete the transactions in September, subject to Repsol’s pre-emption, regulatory and other approvals.

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