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Listed firm Basic Energy Corp. said the UK-based Forum Energy PLC
has defaulted on the sale and purchase agreement it entered into
with Basic Petroleum, the former’s energy exploration unit.
In a disclosure to the Philippine Stock
Exchange, Basic Energy said it has declared Forum in default of
financial considerations worth $10 million for the sale of the
company’s 100-percent stake in Basic Petroleum and Minerals Inc. (BPMI).
The company signed a sale and purchase agreement
with Forum in April 2006 for $17 million in cash and Forum shares.
Basic Energy, formerly Basic Consolidated Inc.,
is primarily engaged in oil and gas exploration but has started to
diversify into the development and production of biofuels and other
alternative and renewable energy resources.
The company, which then had interests in nine
offshore oil and gas fields in Southwest Palawan, was then merged to
Forum’s interests and has since been renamed Forum Energy
Philippines Corp.
The amount Forum allegedly did not pay for the
transaction represents the company’s utilization of BPMI’s
historical cost recovery (HCR) accounts.
Under the SPA, the HCR refers to all of BPMI’s
expenditures in the exploration, development, production and other
related activities in the contract areas that was acquired by Forum.
Basic Energy said that pursuant to its
declaration of default against Forum, “the SPA is deemed
automatically terminated, and all payments made and the Forum shares
delivered to the company prior to the default are considered
forfeited.”
In line with this, BPMI’s assets are also
expected to be reverted to Basic Energy.
BPMI’s assets include interests a number of
offshore fields, including 8.47 percent in Nido, 12.41 percent in
Matinloc and Pandan, 19.46 percent in North Matinloc, 28.6 percent
in Libro, 10 percent in Tara, 7.03 percent in Bonita, 9.1 percent in
West Linapacan, 8.17 percent in Galoc, and 27.7 percent in Service
Contract 41, which covers 4,820 square kilometers and is located
within the Sulu Sea.
Forum’s existing assets, on the other hand,
include the Sampaguita gas discovery within the Geophysical Survey
and Exploration Contract (GSEC) 101 offshore license area in Reed
Bank, and SC 40 in Cebu, which has known onshore and offshore gas
and oil discoveries.
The Sampaguita discovery is said to be a
“world class” find with potential reserves of up to 20 trillion
cubic feet of gas. However, Forum is being barred from harvesting
the resource because of delays in government’s conversion of its
GESEC 101 to a full service contract that would allow it to conduct
drilling activities.
-- Euan Paulo C. Añonuevo
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