CALGARY, Alberta, May 12, 2011 /PRNewswire/ -- FEC Resources Inc. (OTCBB: FECOF) ("FEC") reports that Forum Energy Plc has announced the following:
"("Forum Energy" or the "Company")
Settlement with Basic Energy Corporation
Forum Energy, the UK incorporated oil and gas exploration and production company with a focus on the Philippines, today announces that it has negotiated and agreed a settlement with Basic Energy Corporation ("BEC") in relation to certain of its service contracts in the NW Palawan area, offshore Philippines.
In the course of an arbitration process, on 10 May 2011, BEC and Forum Energy signed a settlement agreement (the "Agreement") in relation to disputes relating to BEC's share in the historical cost recoveries arising from Service Contract 14 A and B (Nido-Matinloc Blocks), Service Contract 14-C (Galoc Block), and other blocks of Service Contract 14 and Service Contract 6, pursuant to the Sale and Purchase Agreement executed by BEC and Forum on 3 April 2006 (the "SPA").
If the terms and conditions of the Agreement are met, Forum Energy will make a cash payment to BEC of US$650,000, and cause the conveyance of (i) 50% of Forum Energy Philippines Corporation's (a wholly owned subsidiary of FEP) ("FEPC") participating interests in the foregoing service contracts, and (ii) 50% of the related recoverable costs, subject to the approval of the Department of Energy.
Upon fulfillment of certain pre-conditions, the parties will submit the Agreement to an arbitration tribunal for the rendition of a final consent award and accordingly FEPC's minority participating interests in its producing fields will be reduced, and consequently Forum Energy's group revenues and its gross profits will be reduced accordingly, as follows:
- Galoc (SC14C-1): participating interest will fall by 50% to 1.137875%. Galoc produced 2.69 million barrels in 2010 (gross) with an estimated 1.76 million barrels expected to be produced in 2011 (gross).
- Nido (SC14A): participating interest will fall by 50% to 4.234%. Nido produced 86,626 barrels in 2010 (gross) with an estimated 65,000 barrels expected to be produced in 2011 (gross).
- Matinloc (SC14B) and North Matinloc (SC14B-1): participating interests will fall by 50% to 6.203% and 9.7315%, respectively. Matinloc and North Matinloc had a combined production of 88,237 barrels in 2010 (gross) with an estimated 91,680 barrels expected to be produced in 2011 (gross).
For the avoidance of doubt, the Agreement does not relate to:
- SC40 (Cebu), in which Forum Energy has a 66.7% interest which includes the Libertad gas field.
- SC72 (Reed Bank), in which Forum Energy has a 70% interest, and which includes the Sampaguita Gas Discovery with mean GIP of 3.4TCF and a number of additional leads. As announced on 15 March 2011, Forum Energy completed its seismic acquisition over SC72 and is currently processing the data with the aim of further evaluating the commercial potential of the block, and to help identify the best location for possible appraisal wells to be drilled in the next sub-phase of the SC72 licence.
If the terms and conditions of the Agreement are met:
- Forum Energy will no longer be liable to pay potential additional consideration of up to US$ 9.03 million on the acquisition of FEPC (formerly Basic Petroleum & Minerals Inc), as was disclosed in the audited results for the year ended 31 December 2010, as announced on 8 March 2011; and
- the Directors believe that no further liabilities in respect of BEC's arbitration claims and other issues arising from the SPA will exist in relation to the service contracts included in the Agreement."
For and on behalf of the Company:
FEC Resources, Inc.
"J.E. Villaluna"
Jose Ernesto C. Villaluna, Jr.
President & CEO
This press release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable Canadian and US securities legislation. All statements, other than statements of historical fact, included herein are forward-looking statements. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, variations in the nature, quality and quantity of any natural resources that may be located, variations in the market price of any natural resource products the Company may produce or plan to produce, the Company's inability to obtain any necessary permits, consents or authorizations required for its activities, the Company's inability to produce natural resources from its properties successfully or profitably, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies, and other risks and uncertainties disclosed in the Company's Annual Report on Form 20-F for the year ended December 31, 2009 and its most recent quarterly reports filed with the United States Securities Exchange Commission (the "SEC"), and other information released by the Company and filed with the appropriate regulatory agencies. All of the Company's Canadian public disclosure filings may be accessed via www.sedar.com and its United States public disclosure filings may be accessed via www.sec.gov, and readers are urged to review these materials.
For more information please contact (403) 290-1676 e-mail [email protected] or visit the FEC Resources website at www.FECResources.com
SOURCE FEC Resources Inc.
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