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The Texas-based exploration and production company Sky Petroleum has announced that Buttes Gas & Oil Co, it’s partner in the Mubarek Field in Sharjah, UAE, has terminated its production contract.
According to a statement, Buttes, a subsidiary of the Sharjah-based Crescent Petroleum, terminated the contract because it believed that the field had “unilaterally and solely determined that the Mubarek Field had reached the end of its economic life”.
As a result of these events the Mubarek Field Participation Agreement signed between Buttes and Sastaro Limited, the Sky Petroleum subsidiary co-operating the field, in 2005 is now terminated despite Sastaro spending US$25 million in drilling and completion costs related to two in-fill wells at the field.
“The Mubarek Field wells H2 and K2-ST4 continues to produce commercial amounts of oil, and Sky Petroleum believes that there is significant residual value in [the field]. Consequently, Sky Petroleum considers the Participation Agreement valid and in good standing,” the statement said.
“Management is evaluating its rights under the Participation Agreement and will take any and all actions required to protect the interests of Sky Petroleum, its shareholders and its investment in the Mubarek Field,” it added.
Sky Petroleum also said that it had been assured by Crescent that its share of the production revenue from the December 2009 lift will be paid promptly upon receipt of the respective sale proceeds.
