Arco acquires 25 % in major gas area in Gulf of Thailand

July 17, 1998 Arco has acquired a 25 % interest in a major natural gas project in the Malaysia-Thailand Joint Development Area in the Gulf of Thailand.
The acquisition came through a definitive agreement signed by Arco with Triton Energy in which Arco will acquire 50 % of the subsidiary holding Triton's interest in the Joint Development Area. Upon closing, Triton and Arco will each hold a 25 % interest in the Joint Development Area through their holdings in the subsidiary. The remaining 50 % will continue to be owned by Malaysian Petronas.
Gross resources are estimated to exceed 10 tcf equivalent.
Under the terms of the agreement, Arco will pay $ 150 mm to Triton upon closing. Arco has also agreed to fund half of the project development costs until first commercial production, up to a maximum of $ 377 mm. Arco will recover these development costs under the terms of the production sharing contract once production commences.
In addition, Arco has agreed to make incentive payments of up to $ 65mm in 2002 and again in 2005 if specific development objectives are met over the life of the project.
Development of the Joint Development Area is the responsibility of CTOC, an operating company formed between Triton and Caragali, the exploration and production arm of Petronas.

Commenting on the agreement, Arco Chairman and CEO Mike R. Bowlin said: "This project is very attractive for Arco and consistent with our strategy of emphasising exploration and production in our core focus areas. We view the Joint Development Area as a world-class asset with significant reserves strategically located in a high-potential gas market. Arco has extensive experience in pipeline gas projects in Asia, as evidenced by our long-standing presence in Indonesia and our more recent Yacheng-13 project in China."
"We have the greatest respect for Triton and look forward to working with them as partners to develop this important asset. We are also very excited to have the opportunity to continue to build our relationship with Petronas Caragali."