Forum Energy, the UK incorporated oil and gas exploration and production company with a focus on the Philippines, notes the announcement made by Otto Energy Limited ("Otto") to the ASX today in relation to the second phase of the development of the Galoc oil field (SC-14) (the "Galoc field"), in which Forum has a 2.27% interest through its wholly owned subsidiary, Forum Energy Philippines Corporation ("FEPC").   

Phase II of the development requires US$188 million from the joint venture partners in order to drill and complete two subsea wells tied into the existing infrastructure with a view to more than doubling production from the current levels.  The drilling rig is expected to be mobilised in early Q2 2013, and first oil is scheduled for the second half of 2013.  For further details please refer to Otto's announcement of today's date referred to above.

As joint venture participants in the Galoc field, Forum Energy and FEPC, together with Otto and a subsidiary of Otto, have entered into a facility agreement with BNP Paribas (the "Facility Agreement") to provide a total of US$40 million project financing for the Galoc field's Phase II development. Under the Facility Agreement, FEPC will borrow US$2.58 million (the "Forum Tranche") as part of its share of capital expenditure committed to the development with the balance being funded from existing cash resources.

Key terms of the facility are as follows:

  • 3 year tenor term loan facility will expire on December 31 2015
  • Repayments are to commence in Q1 2014
  • Interest costs at a competitive market rate   
The Forum Tranche is secured on FEPC's interests in the Galoc field and the Company's shares in FEPC and the Forum Tranche is guaranteed jointly and severally by Forum Energy and Otto.

Subject to the satisfaction of conditions precedent, the first drawdown of the facility is expected to be in Q1 2013.

In the year ended 31 December 2011, within Forum Energy's audited revenues of US$12.7 million (2010: US$6.1 million), production at Galoc generated US$10.1 million (2010: US$4.1 million).  As noted in the Company's trading update of 24 October 2012 there was a planned, temporary suspension of production at the Galoc field, whilst the Floating Production Storage and Offloading vessel operating at the field was upgraded during the first half of 2012.  Production at Galoc is now running at approximately 5,000 barrels of oil per day (gross).   

For further information please contact:   
Forum Energy Plc
Andrew Mullins, Tel: +44 (0) 1932 445 344
Executive Director & Company Secretary   

Execution Noble & Company Ltd (Nominated Adviser & Broker)
Harry Stockdale, Tel: +44 (0) 207 456 9191
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