Paladin Resources PLC
8 July 2002
Paladin Resources plc
("Paladin","the Company", or "the Group")
£10.7 million Acquisition of Further Interests
in the Siri and Stine 2 Oil Fields, offshore Denmark
Paladin announces that its wholly owned subsidiary Paladin Oil Denmark Limited
("PODL") has signed an Assignment Agreement under which PODL will acquire from
DONG Efterforskning og Produktion A/S ("DONG") a further 4.737 per cent interest
in Danish Licence 6/95, which contains the producing Siri Field, the Stine 1 oil
discovery and exploration prospects, and a further 7.14286 per cent interest in
the producing Stine 2 oil field which also lies within the Licence 6/95 area.
As a result of this acquisition, brought about by the partial exercise of its
pre-emptive rights in respect of the recently announced sale to DONG of Statoil
A/S's 40 per cent stake in Licence 6/95, PODL's interest in the Siri Field, the
Stine 2 Field and the Stine-1 oil discovery will increase to 30 per cent.
The consideration is 123.9 million Danish Kroner (approximately £10.7 million),
which will be subject to adjustments for cash flows and interest between the
effective date of 1 July 2002 and completion. Completion is expected to occur in
late August 2002 and is subject to the approval of the Danish Energy Authority.
The consideration will be met from bank facilities.
The Siri Field is currently producing at ca. 19,000 barrels of oil per day ("
bopd") with production forecast to continue until at least 2007, and the Stine 2
Field is producing at a rate of ca. 7,500 bopd through an extended reach well
drilled from the Siri Platform.
Development plans for the Stine 1 oil discovery have recently been approved by
the Danish regulatory authorities. This discovery is to be developed as a
sub-sea satellite to the Siri Field and will come on stream in mid 2003; at peak
production it is forecast to produce at a rate of 11,000 bopd.
As a result of the acquisition, Paladin's net Danish production will rise by ca.
1400 bopd to ca. 8,000 bopd, and current Group production will rise to ca.
34,000 boepd. Reserves to be booked on acquisition will be ca. 1.0 MMbbl.
Paladin will also derive incremental benefit from the opportunities for third
party business associated with the Siri Field infrastructure.
In that respect, DONG have today announced that plans to develop the nearby Nini
and Cecilie Fields as satellites to the Siri Field have been formally approved
by partners and the Danish regulatory authorities. Total reserves from the two
fields are estimated to be 65 million barrels and first production is scheduled
for late summer 2003. Production from both fields will be processed on and
shipped from the Siri Field platform. Although PODL has no direct stake in
either of these fields, it will derive economic benefit once they are on stream
as a result of the sharing of Siri Field operating costs and from the receipt of
tariff income from Nini and Cecilie production.
Roy Franklin, Chief Executive of Paladin, commented:
"We acquired our initial Danish interests at this time last year and have been
delighted with the performance of Siri and Stine 2 to date. Today's announcement
regarding the development of the Nini and Cecilie Fields is excellent news for
Paladin; not only will there be the direct benefit of tariff income from both
fields, but also a marked reduction in the unit operating costs for our own
production from the Siri and Stine Fields. As a joint-venture we are optimistic
that there will be further satellite development opportunities resulting from
exploration in the Licence 6/95 area."
8 July 2002
Paladin Resources plc Tel: 020 7534 2900
Roy A Franklin, Chief Executive
Cuth McDowell, Finance Director
College Hill Tel: 020 7457 2020
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