TRITON SIGNS HEADS OF AGREEMENT FOR BLOCK A-18 NATURAL-GAS SALES; US$5.5 Billion in Gas Sales Expected.
The agreement specifies a formula for determining the price for gas delivered at the platform. Under the formula, the base price is US$2.30 per million British thermal units (MMBtu). The actual sales price, which will be calculated and payable in U.S. dollars, will be adjusted annually by a formula that includes U.S. dollar-denominated inflation and fuel-oil price indices. According to this formula, the price, if calculated today, would be US$2.56 per MMBtu.
The sellers have granted the buyers a 5% price discount after the delivery of 500 billion cubic feet, which should occur during the fourth year of production. The price discount will be increased to 10% after a cumulative delivery of 1.3 trillion cubic feet. The discounts are intended to give the buyers incentives to increase their purchases.
The heads of agreement was signed today at a ceremony in Songhkla, Thailand, which was attended by the Prime Ministers of both Thailand and Malaysia, as well as representatives of the buyers and sellers.
"The signing of this agreement is a milestone for Triton," said Thomas G. Finck, Triton Chairman and Chief Executive Officer. "Our years of commitment and hard work are beginning to become a reality as we embark on what will be several development phases of this massive gas resource.
"We are privileged to be in partnership with Petronas Carigali on this world-class gas exploration and development project," Finck said. "We congratulate and commend the governments of Thailand and Malaysia and the Malaysia-Thailand Joint Authority for their vision that has made this project a model of regional cooperation. With our partner, we look forward to providing a strategic supply of pipeline gas that will fuel the growing economies and energy needs of Thailand and Malaysia for many years to come."
Buyers of the gas are the Petroleum Authority of Thailand (or PTT), the Thailand national oil company, and Petroliam Nasional Berhad (or PETRONAS), the Malaysian national oil company, on a 50/50 basis. In addition to Triton, sellers of the gas are Petronas Carigali (JDA) Sdn. Bhd., a subsidiary of PETRONAS, and the Malaysia-Thailand Joint Authority, the statutory body representing Thailand and Malaysia in JDA petroleum operations.
Other significant agreement terms
Delivery of a daily contract quantity of 390 million cubic feet of gas per day (expected to equal approximately 372 billion Btu per day) is scheduled to begin with first-phase development in the first half of 2001 and to continue for at least 20 years.
The heads of agreement includes a take-or-pay provision that specifies the buyers must take a minimum of 90% of the daily contract quantity, and the sellers must be able to deliver a maximum of 110% of the daily contract quantity.
Gas will be transported via pipelines to Thailand and Malaysia. The buyers are responsible for the construction and operation of pipelines to transport the gas from Block A-18.
Signing the heads of agreement precedes the signing by the buyers and sellers of a gas-sales agreement, which is expected to include the terms of the heads of agreement, as well as address the timing and daily contract quantities of future development.
The heads of agreement encompasses the purchase of all Block A-18's natural-gas resource base, which, based on discoveries to date, Triton estimates to be 10.6 trillion cubic feet of gas.
Initial development plans call for production from the Cakerawala Field, the first field discovered on Block A-18 in 1995.
Carigali-Triton Operating Company (CTOC), the operator of Block A-18, has begun field development work with the award of a conceptual design and engineering study to better define the project's costs, design and technical parameters. The study is expected to be completed by mid-1998.
CTOC plans to let for bid an EPC (engineering, procurement and construction) contract for production platforms and facilities to begin development of the Cakerawala Field. Development costs for this project are estimated to be more than US$600 million; however, a better determination of final costs will be made following the award of the EPC contract. Triton and Petronas Carigali are each responsible for 50% of the costs.
The initial development plan includes three wellhead platforms, a living-quarters platform, a processing platform and facilities for gas production, a riser compression platform, a floating storage and offloading vessel, and 35 development wells.
The timing of gas delivery during future development has yet to be determined. However, it is anticipated that the block's current gas resource base ultimately could result in future gas production of more than 1 billion cubic feet per day.
There also are plans to produce Block A-18's oil and condensate, which comprise about 15% of the block's hydrocarbon resource base. Condensate produced in association with the gas -- about 5,200 barrels per day -- will be sold separately. A program to develop the oil on the block will be determined later.
At year-end 1997, Triton's evaluation of the estimated gross resource base (proved, probable and other oil and gas reserves) from the eight fields discovered to date on Block A-18 was 12.5 trillion cubic feet of natural-gas equivalent. This amount includes 10.6 trillion cubic feet of gas and 309 million barrels of oil and condensate.
In April 1994, Triton and Petronas Carigali signed production-sharing and related contracts to explore and develop hydrocarbons on Block A-18 in the Malaysia-Thailand Joint Development Area. The companies formed Carigali-Triton Operating Company (CTOC), a joint operating company that is operator of the Block A-18 project. CTOC is owned by Petronas Carigali (JDA) Sdn. Bhd., an exploration and production subsidiary of PETRONAS (50% interest), and Triton (50% interest).
In addition to the eight discovery wells drilled on Block A-18, CTOC has drilled six successful appraisal wells. During 1998, Triton and its partner are continuing exploration and appraisal drilling on the block.
Block A-18, which covers 295,832 hectares (731,000 acres), is located about 450 km (280 miles) from Kuala Lumpur, Malaysia, and 750 km (465 miles) from Bangkok, Thailand, in the northern Malay Basin.
Triton Energy Limited (NYSE: OIL) is a Dallas-based international oil and gas exploration and production company primarily focused on large-scale projects and exploration opportunities around the world. The Company has major projects under way in Latin America and Southeast Asia. It is actively exploring for oil and gas in these areas, as well as in southern Europe, Africa and the Middle East.
Certain statements in this news release regarding future expectations and plans for international exploration and development, including the amount of future gas revenues; the Company's share of Block A-18 revenues, which will vary depending on development costs and sales prices; timing of initial deliveries; volumes of future gas production; estimated development costs; and the execution of a gas-sales agreement and implementation of a field development plan, as well as reservoir estimates, may be regarded as "forward-looking statements" within the meaning of the U.S. Securities Litigation Reform Act. They are subject to various risks, such as the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas, discussed in detail in the Company's Securities and Exchange Commission filings, including the Annual Report on Form 10-K for the year ended December 31, 1997. Actual results may vary materially. -0-
For more information about Triton: www.tritonenergy.com or 888/OIL-NYSE.
CONTACT: Triton Energy Limited, Dallas
Investors -- Crystal C. Bell, 214/691-5200
Media -- Sheila Durante, 214/696-7655
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|Date:||Apr 22, 1998|
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