Canada's Niko Resources Ltd. announced that it has executed two sets of agreements. As long as getting the government approvals, it will proceed of nearly $38 million.

 

Niko has signed cooperation agreement with OMV, which is an international oil and gas company. Under the agreement, OMV will have a 40 percent interest in the Grand Prix Production Sharing Contract (PSC) in Madagascar, while Niko gaining 35 percent. The deal can be closed only when the Government of Madagascar has agreed.

 

Niko has also signed an agreement with Hess Coporation for getting a 100 percent interest in the Semai V PSC, which is located offshore Papua province in eastern Indonesia. The Andalan 1 and 2 had been drilled, and one is expected to be drilled in future. The result shows the hydrocarbon may exist in the block.The Company also signed an agreement to get more interest from the Kofiau PSC, which is located in the same province with the Semai V PSC. The end of deal is also depended on the government of Indonesia

 

The Elit-1 well, located in the same place with Kofiau PSC, has been drilled in water of 1,335 feet. In 9 days of work, it has been drilled to a total depth of 3,915 feet by using the UDW semisub.The well encountered 10 feet of gas at the top of a 90 foot sand package and has been plugged and abandoned.

 

The company considered its capital spending priorities, and decided to suspend its drilling program in Indonesia. In a period of time, the company is working on various options to drill for third parties, or to supply service to third parties or to assign the contract for the Ocean Monarch. The Ocean Monarch is being mobilized to the Makassar Strait area until the decision on the next drilling location has been made.

 

The Company is continuing its discussions with its credit facility syndicate banks regarding the re-determination of the borrowing base under its credit facility. The redetermination date is delayed to Sept.30 and required adjustment date delayed to Oct.31.

 

In order to have more found for programs in the future, the company is choosing a way to refinance its credit facility.