As of December 31, 2009, the estimated gross proved and probable reserves in the Bualuang oil field amounted to approximately 22.5 million barrels of oil (mmbo).
Three horizontal development wells were completed in the first half of 2010, and the field is forecast to produce approximately 8,500 barrels of oil per day (bopd) on average in 2010.
The consideration for the acquisition is $105m in cash, less a working capital adjustment for the period from the effective date to closing and certain other effective date adjustments. In addition, a $1m contingent cash payment will be made upon production of a million barrels of oil from any new discovery made within the B8/38 license area, and located 5km or more from the existing Bualuang oil field. The transaction is scheduled to complete during August 2010.
The acquisition constitutes a Class 1 transaction for Salamander and is conditional upon receiving approval from shareholders. The acquisition will also be conditional on the approval of SOCO shareholders.
Salamander will finance the proposed acquisition through a combination of cash and a new $90m, 18 month Bridge facility provided by Standard Chartered Bank and BNP Paribas.
James Menzies, chief executive of Salamander, said: “This transaction represents a deepening of our interests in an asset we already operate and which we know well. We see scope for further exploiting the Bualuang oil field and the attractive, low risk exploration potential in the B8/38 license.”
