Press release from Marketwire
TVI Pacific Inc. Signs a Memorandum of Agreement to Develop Three Oil Fields in SC 54A
Thursday, May 31, 2012
TVI Pacific Inc. Signs a Memorandum of Agreement to Develop Three Oil Fields in SC 54A19:58 EDT Thursday, May 31, 2012CALGARY, ALBERTA--(Marketwire - May 31, 2012) - TVI Pacific Inc. (TSX:TVI) (OTCQX:TVIPF) (TVI or the Company) is pleased to announce that its wholly-owned subsidiary TG World (BVI) Corporation (TG World) along with SC 54A Joint Venture partners Nido Petroleum Philippines Pty Ltd., Trafigura Ventures III B.V. and Yilgarn Petroleum Philippines Pty Ltd. (the Participants), signed a memorandum of agreement (MoA) with Viking Energy Holdings 2 Ltd ("Viking") to develop three oil fields in SC 54A. The MoA is subject to negotiation and execution of a formal agreement between the parties.The MoA outlines key commercial terms upon which a farm-in agreement will be subsequently negotiated in the next few weeks. Broadly, these terms are as follows:- The Participants will collectively assign a 60% equity interest in SC 54A in return for Viking assuming operatorship and carrying the Participants in three oil field developments up until first oil;- Viking will finance all required capital expenditure associated with bringing the Yakal, Tindalo, and Nido 1X1 undeveloped oil fields into production. This will include the drilling of one well in each field;- The final investment amount will be agreed between Viking and the Participants on selection of the most appropriate technical and commercial solution; and- Viking will receive a preferential proportion of the net cash flow generated from SC 54A until such time as it has recovered in full its capital expenditure in the project. Viking anticipates bringing the Yakal and Tindalo discoveries into production first, followed by Nido 1X1 at a later stage.Viking plans to use cost-effective offshore production and storage facilities comprising a mobile offshore production unit ("MOPU") and a FSO/Storage Tanker moored to a CALM Buoy to commercialise the three oil fields. The Participants and Viking will work in collaboration with Offshore Production Solutions (OPS) and Thome Oil & Gas (TOG) on the project, whereby OPS will provide offshore production facilities under bareboat charter arrangements on competitive market terms to be agreed; and TOG will provide operation and maintenance services for the offshore production facilities under an operation and maintenance agreement on competitive market terms to be agreed.It is anticipated that the first field will be brought into production by Q2 2013, subject to relevant approvals from third parties and the Department of Energy of the Republic of the Philippines and the availability of rig and production facilities.TVI's CEO, Mr. Cliff James commented, "The signing of this MoA is a key step for TVI to realise cash flow from its interest in SC 54A. Furthermore, this collaboration provides a relatively low-risk approach for TVI to participate in the development of these assets. I am pleased to work together with Viking and the rest of the Joint Venture Participants to advance the opportunity presented in SC 54A." Participating Interests in SC 54A relating to this MoA are as follows:CompanyPresent %Post Farm-in %Nido Petroleum Philippines Pty Ltd(Nido)42.40 (Operator)16.96Yilgarn Petroleum Philippines Pty Ltd (Kairiki)30.1012.04TG World BVI Corporation (TG World)12.505.00Trafigura Ventures III B.V. (Trafigura)15.006.00Viking Energy Holdings 2 (Viking Energy)0.0060.00 (Operator)Total Interest 100.00 100.00Information on Viking Energy:Viking Energy Group, a London based private E&P Company focusing on the development and monetization of offshore oil and gas fields in Africa and Asia using cost-effective offshore production and storage facilities developed and operated in collaboration with the Thome Group. The Viking Energy Group currently has operated interests in two oil fields that will be brought into production at 24,000 bbl per day during 2013 and will generate in excess of US$500 million of post-tax cash flow within the next 5 years. The Viking Energy Group is in the process of acquiring interests in four additional fields with 2P reserves of c.30 mmbbls.About TVI Pacific Inc. (TSX:TVI) (OTCQX:TVIPF)TVI Pacific Inc. is a publicly-traded Canadian company that is focused on the production, development, exploration and acquisition of resource projects in the Philippines. TVI produces copper and zinc concentrates from its Canatuan mine, is pre-developing its Balabag gold and silver project, and is carrying out exploration programs on its other North Zamboanga tenements. TVI also has an interest in an offshore Philippine oil property.Connect with us www.tvipacific.comFollow us on Twitter www.twitter.com/tvipacific"Like" us at www.facebook.com/tvipacificFOR FURTHER INFORMATION PLEASE CONTACT: Raina VitanovTVI Pacific Inc.Vice President, Investor & Corporate Relations403.email@example.comORLaureen DukartTVI Pacific Inc.Investor Relations Coordinator403.firstname.lastname@example.orgThe Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.