Home' Trinidad and Tobago Guardian : June 29th 2014 Contents JUNE 29 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG7
Canada s Calgary, Alberta-headquartered
Niko Resources Ltd yesterday estimated
it will make US$1 billion from its natural
gas reserves in T&T. In a statement
released with the company s results for
the year ended March 31, (2014), Niko
said: "The company s estimated reserves
as at March 31, 2014 included 197 billion
cubic feet (Bcf) of proved natural gas reserves and 235 Bcf of
proved plus probable natural gas reserves related to its interest
in Block 5c in T&T that was sold subsequent to March 31,
After adjusting for the sale of the company s interest in
Block 5(c) in T&T, which closed in the current quarter (from
April to June, 2014) "the estimated aggregate after-tax net
present value of future net revenue attributable to the company s
estimated proved plus probable reserves (discounted at 10 per
cent and estimated using forecast prices and costs) as at March
31, (2014) is approximately US$1 billion, " the statement said.
Niko sold its 25 per cent interest in Block 5c to a subsidiary
of the British Gas Group of the UK. The BG Group already
had the remaining 75 per cent interest in the block off the
east coast of Trinidad.
In its message to shareholders, Niko s board of directors
said that in the second quarter of fiscal 2014, the company
adopted a new business strategy that incorporates three prin-
ciples, the first of which is to "focus on value generation in
the D6 Block" in India.
The second principle is to "reduce the company s exposure
to future drilling commitments in its exploration portfolio
while, if possible, maintaining optionality to benefit from the
exploration potential in the portfolio, " and the third principle
is to "continue to restructure the company to create the nec-
essary financial strength and flexibility to realise the inherent
value of the company s assets."
In the third quarter of fiscal 2014, Niko closed on its US$340
million debt facility while simultaneously raising approximately
US$30 million (net) in equity.
"Through this financing, the company rebalanced its debt
obligations, extended the majority of its debt maturities out
to calendar 2017, finalised a settlement agreement for its long-
term drilling contracts, and added US$174 million in cash to
the company s balance sheet, thus providing funding and time
for execution of the company s new strategic focus," the state-
Niko ceases exploration in T&T
Niko also said it implemented over the past year, the "sus-
pension of exploration activities outside of India. "Niko, one
of the largest acreage holders in T&T, said: "Exploration efforts
ceased in Indonesia, Trinidad, Madagascar, and Brazil, with
drilling and technical staffing reduced significantly. Activities
in these countries are now focussed on farm-outs and/or sales
of working interests along with extensions of drilling obligations
or modifications of terms. "
In addition, the company said it initiated discussions with
its vendors in Indonesia and Trinidad toward "settlement of
the payables accrued from its drilling programmes."
Niko said it is also expanding its board of directors.
"Four new independent directors joined the board, bringing
expertise and in-depth experience in corporate turnarounds
and rebuilding, and the board formed a special restructuring
committee to directly oversee the company s restructuring
efforts," the statement said.
Niko said it is also implementing changes in management.
"New executive talent joined the company with practical expe-
rience in financial restructuring and the company hired an
in-house general counsel. The company also retained specialised
consultants to advise on the many technical aspects of corporate
Looking for new CEO
Niko said its board retained a search firm to identify candidates
for a new chief executive officer who is to provide the leadership
to complete the company s restructuring and develop the
strategic roadmap for future value growth of the company.
In the first quarter of fiscal 2015, the company sold its interest
in the Block 5(c) asset, providing funds to repay US$15 million
of its settlement obligation for its drilling contracts and US$20
million of the short-term "Facility E portion" of the term loan,
and adding an additional US$26 million in cash to the balance
sheet. At the time of selling to the BG Group, Niko had said
it was selling for gross proceeds of US$62 million.
Niko said it is now dealing with the decisions of the gov-
ernment of India to defer, first in March and now in June, the
notification of the natural gas price calculated from the pricing
formula in the Domestic Natural Gas Guidelines, 2014 that
the government of India had notified earlier in the year.
In the opinion of the contractor group of the D6 Block, the
Indian government has contravened the terms of the D6 pro-
duction sharing contract (PSC) and, as a result, the contractor
group filed an arbitration notice against the government seeking
implementation of the guidelines in accordance with the terms
and conditions of the PSC.
The D6 contractor group will try to work with the government
to achieve a prompt and efficient resolution to this dispute,
the statement said.
For the year ended March 31, Niko deepened its losses by
US$441 million. For the year ended March 31, 2013, Niko
posted a loss of US$216 million, and then more than tripled
that figure at the end of its 2014 fiscal year to US$657 mil-
Niko expects to make US$1bn
off remaining T&T reserves
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