First Calgary Petroleums Ltd (FCP or the Company) refers to recent Canadian press comment on the Company which contains a number of matters requiring clarification.
In the article concerned a figure was quoted for the sales price of gas. Such information is part of the gas marketing agreement signed last year with Sonatrach, which is structured similarly to standard natural gas long term supply agreements with complex pricing formulae. FCP is unable to release gas price information publicly under the confidentiality terms of that agreement. However FCP would like to state that the figure quoted for the sales price of gas in the article is incorrect.
The article also refers to the phase 1 development cost. The total estimated cost of the MLE development has been revised to US$1-1.3 billion. FCP’s share of the development cost is 75%. The increase from previous Company guidance reflects the agreement of FCP to include the block tie-in pipelines as a joint development cost. Consequently FCP will receive an increased share of production under the production sharing contract, providing an offset to the increased cost. The range of estimated cost above depends upon the ultimate capacity of plant, production and field gathering facilities, which have not been determined yet. It is premature for detailed plans for the development funding to be decided – in due course this is expected to be in the form of project debt, equity, joint venture farm-out arrangements or some combination thereof.
FCP expects that the MLE development plan approval (commercialisation) will be received imminently from the Algerian authorities.