re: Ann: Balai Cluster RSC Project Finance Se... Hi Corporate,...

re: Ann: Balai Cluster RSC Project Finance Se... Hi Corporate, from what little I have been able to find about the arrangement, it seems as if the JV partners (i.e. BC petroleum) are takingthe role of contracted field developers and operators, while Petronas is the field owner. BCP invests the money to test, develop and then operate the field. Upon commencement of commercial production, BCP receives 3 components of income from Petronas' sales revenue:

1. A reimbursement of the capex investment over a period of time (or over a number of bbls of oil)

2. A production-based fee for operating the field

3. Incentive payments for meeting certain performance KPIs

The only info I have been able to find on the balai fields' potential (described by the Malaysians as "marginal") is for early production rates to be in the order of 20,000-30,000 bopd (thats marginal?!? - I invest in some small cap oil and gas explorers/producers that dont even do 1% of that!!!) , and the contract has a 15 year lifetime.

See article in link below for some details:

http://etp.pemandu.gov.my/News-@-Analysts_and_market_positive_on_Dialog's_marginal_field_contract.aspx

I can only conclude that for ROC and its partners to be willing to put $200-300M each at risk, there must be enough 2D/3D or other geological/ data to demonstrate that there is oil there, and its only a question of how much. Assuming they've done that due diligence, then its a matter of what the operator fee and incentives are that will make it worthwhile, because they will get reimbursed for the capex. The NPV must be several multiples pf the capex (even with reimbursement) to make it worthwhile.

Cheers, Sharks.