Neon loses Indonesian block after failing to pay

KrisEnergy Ltd., an independent upstream oil and gas company, is soon to acquire an additional 42% share in Indonesia Tanjung Aru PSC.

Pursuant to the default and subsequent withdrawal of Neon Energy, a deed of assignment was executed today between KrisEnergy, Neon Energy and Natuna to formalise and effect the transfer of Neon Energy’s 42% working interest to KrisEnergy.

The completion of such transfer is pending government approval. Upon completion, KrisEnergy will hold 85% working interest in Indonesia Tanjung Aru PSC.

To remind, Under the PSC’s joint operating agreement (“JOA”) KrisEnergy and Neon Energy had entered into a deed of carry with Natuna to pay a portion, up to an amount of US$1,000,000 relating to a 502 sq km 3D broadband seismic acquisition program completed in the Tanjung Aru PSC in April 2014, of Natuna’s share of costs until December 2016. KrisEnergy therefore assumed the full costs of Neon Energy’s Default Amount. Neon Energy had 20 days to repay the amount and, according to KrisEnergy, the company has failed to pay.

Further to nonpayment of a US$1,300,000 cash call due for payment on 2 April 2014, KrisEnergy issued a Notice of Withdrawal to Neon Energy.

According to a statement issued by Neon today, Neon Energy later submitted a formal offer to KrisEnergy to pay all outstanding cash calls, (plus applicable interest) pertaining to the recently completed seismic program, in return for KrisEnergy agreeing to rescind the Notice of Withdrawal issued on 5 May 2014.

Neon says that KrisEnergy has chosen not to accept the offer, and consequently Neon has executed a Deed of Assignment to effect a transfer of the Company’s 42% working interest in the Tanjung Aru PSC to KrisEnergy.
The Deed of Assignment provides Neon with a full release from any further liability.

“Neon made a “good faith” contribution of US$300,000 towards the relevant cash call on 4 April 2014, with the balance of the cash call payable pending completion of the sale of the Company’s Californian assets. Subsequently KrisEnergy issued a Notice of Withdrawal upon expiry of the 20 day default remedy period prescribed by the Joint Operating Agreement, and before Neon was able to remedy the default by paying the outstanding funds,” Neon says in a statement.