Tap Oil settles dispute with Mubadala
Tap Oil Limited has reached a deal with the operator of the Manora oil development in Thailand, Mubadala Petroleum, for the settlement of the final capital costs of the Manora field facilities.
On March 2, 2015, Tap announced an unexpected capital expenditure increase of $28 million ($8.4 million Tap share) for the construction of the Manora oil facilities relating to delays in hookup, commissioning and contractor claims.
Tap has agreed to pay $5 million of the final disputed amount of $9.1 million as the final balance of the Manora Oil Development facilities capital expenditure. Payment of the $5 million will be made in two equal instalments on September 30 and December 31, 2016.
Tap’s financial statements at June 30, 2015 reflected a carrying value for the Manora Oil Development of $105.7 million. The settlement agreement will result in a further $5 million being included in the carrying value before any impairment testing at December 31, 2015. The finalisation of the facilities costs and the elimination of exposure to any further related costs or claims provides Tap and its lenders with greater certainty around the value of Manora.
As part of the agreement, Tap also has extended time to pay $5 million of cash calls which will now be paid in equal instalments on March 31, 2016 and June 30, 2016.
Tap Managing Director and CEO, Troy Hayden, said: “We are pleased to have signed an agreement with the Operator finalising the Manora Development’s facilities costs. The payment terms and confirmation there will be no further facilities capital costs to be paid by Tap, provide Tap and its lenders with certainty and financial clarity, a critical element given current market conditions.”