Ophir Oil Field – Development
The Ophir field, offshore Peninsular Malaysia, has been developed by Ophir Production Sdn Bhd (OPSB) under a Risk Service Contract (RSC), with OPSB as Contractor and PETRONAS as the resource owner. Octanex holds a 50% interest in OPSB.
The Ophir development consists of a wellhead platform, three production wells and export via a Floating Production Storage and Offloading (FPSO) vessel.
The MTC Ledang FPSO has a process facility module with capacity for 15,000 barrels of fluid per day and gas flaring, and is capable of storing up to 300,000 barrels of crude. It is anchored to the seabed and connected to the wellhead platform via a flexible 8” pipeline. The MTC Ledang FPSO contracted to be at the Ophir field for a period of three years, with a one year extension option.
PETRONAS introduced the RSC model as a petroleum arrangement designed with the objective of intensifying upstream Malaysian oil and gas activities and developing smaller, stranded oil and gas resources. Under the terms of the RSC, the Contractor (OPSB for the Ophir field) is the service provider and Operator of the field, while PETRONAS is the resource owner. Upfront investment of capital is contributed by the Contractor, with the Contractor compensated via the reimbursement of costs plus a remuneration fee for services rendered. The remuneration fee is linked to production volume and capital cost key performance indicators, and paid from proceeds of Ophir crude sales made by PETRONAS.
Octanex’s share of the Ophir project is fully funded via OPSB’s 75% project financing and Octanex’s US$12Million Convertible Note facility (drawn to US$8Million) with Sabah International Petroleum, which is wholly owned by Sabah Development Bank Berhad (“SDB”). SDB itself is wholly owned by the Ministry of Finance of the Malaysian state of Sabah.
OPSB will be compensated by PETRONAS on a quarterly basis, anticipated to commence following the end of the December 2017 quarter, from the proceeds of Ophir crude sales. Compensation will comprise reimbursement of capital costs, reimbursement of operating costs and remuneration fee, in that order.
Advances by Octanex and other shareholders to OPSB are subordinated to OPSB’s project financing arrangements. Octanex’s entitlement to payments from OPSB will take effect following repayment of the project finance and will first be in the form of repayment of shareholder advances and then in the form of dividends.
Octanex may be required to redeem the SIP convertible note facility from the proceeds of payments received from OPSB; alternatively, SIP may elect to convert the SIP convertible notes into Octanex shares (the facility is comprised of three equal tranches of notes with conversion prices of $0.15, $0.20 and $0.25).