PETRONAS Awards Talisman Energy the Kinabalu Oil PSC

abarrelfullabarrelfull wrote on 19 Feb 2015 19:41

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May 28, 2012

Petroliam Nasional Berhad (PETRONAS), the national oil company of Malaysia, has formally awarded Talisman Malaysia Limited (Talisman Energy, TSX:TLM, NYSE:TLM) and PETRONAS Carigali Sdn. Bhd. (PETRONAS Carigali) a new production sharing contract (PSC) for the continuing production, further development and improved recovery of crude oil from the Kinabalu oil fields, which comprise the Kinabalu Main, Kinabalu East and Kinabalu Far East fields, offshore Sabah ("Kinabalu Oil Fields"). The Kinabalu Oil Fields have a number of producing mature fields, with significant development upside.

"We appreciate PETRONAS' vote of confidence and we are very excited about this opportunity," said Paul Blakeley, Talisman's Executive Vice-President of International Operations East. "Talisman has a proven track record of growing production and extending the life of mature fields, and the Kinabalu Oil Fields give us the opportunity to demonstrate this in Malaysia. The PSC is also adjacent to the Talisman operated Sabah exploration block, which provides additional upside in the region."

This new PSC is the first of a new "progressive volume-based" (PVB) PSC to be awarded by PETRONAS. The PVB PSC was specifically designed to incentivize contractors to improve oil recovery and increase production from mature oil fields.

Talisman and PETRONAS Carigali plan to invest over US$1 billion to increase oil recovery and production over the life of the PSC. This will add to the list of fields in Malaysia where improved oil recovery techniques are being used to increase both production and reserves. Talisman will hold a 60% working interest and operate; PETRONAS Carigali will hold the remaining 40%.

Ron Aston, Vice-President and Country Manager for Talisman Malaysia, noted the opportunities this new asset will present for Talisman's employees and contractors. "This PSC will allow Talisman to offer new opportunities for career growth to our existing Malaysian staff, many of whom have gained world-class experience on Talisman's existing assets in Peninsular Malaysia. At the same time, development and production of the Kinabalu Oil Fields offers opportunities for new jobs and new suppliers in Sabah, Labuan and across Malaysia."

The Kinabalu Oil Fields are currently operated by Shell, with the current PSC expiring in late December 2012. All participants are working together to ensure a safe, successful transition.

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