Kairiki Energy Limited's wholly-owned subsidiary Yilgarn Petroleum Philippines Pty Ltd has entered into an agreement with TG World (BVI) Corp. (a subsidiary of TG World Energy Corporation) (TG World) to farm-out 4.9% of its current 35% interest in Service Contract 54 Block A (SC 54A), offshore, Northwest Palawan Basin, Philippines.

Consideration potentially totals US$4.38 million (~A$4.9 million) which comprises an up-front cash payment of US$2.06 million (~A$2.3 million), followed by a set of staged payments that fall due at the commencement of production at the Tindalo oil field and as subsequent crude oil cargoes from the field are lifted. Under the terms of the agreement TG World will also market its net share of the crude oil produced from SC 54A with Trafigura Pte Ltd.

This additional cash will provide Kairiki funding through the capital expenditure phase to Tindalo first oil and also for working capital required prior to the receipt of cash from the first cargo offloaded from Tindalo.

Kairiki's Managing Director, Mark Fenton said, 'Kairiki is very pleased to conclude this agreement with TG World and welcomes them to the SC 54A Joint Venture. TG World is joining the SC 54A Joint Venture at a very exciting time with the Tindalo project now well advanced and oil production scheduled to commence in the coming months.'

TG World's President and CEO, Mr. Cliff James, said, 'Our involvement in SC 54A not only provides near-term cash flow if successful, but also places us in the middle of a prolific development and exploration fairway. In addition to the four discoveries identified (Tindalo, Yakal, Nido 1X1 and Signal Head-2), SC 54A contains some 19 other identified pinnacle reef targets that may offer follow-up successes. Furthermore, the oil and gas potential and advantageous fiscal regime of the Philippines has been vindicated by the entry of major players in the Palawan Basin, including Shell, BHP Billiton and Exxon Mobil.'

Tags: Kairiki Energy Limited