Triton Energy Closes Transaction with ARCO, Securing Financing for Gas Reserves Development

Strategic Insights -

Triton Energy, a Dallas-based international oil and gas exploration and production company, has closed its transaction with Atlantic Richfield Company (ARCO) to provide financing for the development of its gas reserves on Block A-18 of the Malaysia-Thailand Joint Development Area (JDA). The deal, announced earlier, sees ARCO acquire 50% of the subsidiary holding Triton's interest in the JDA, with Triton receiving $150 million in payment. ARCO has also agreed to fund up to $377 million of the combined Triton-ARCO share of Block A-18 expenditures, related to the first phase of field development. Additionally, ARCO will pay Triton a further $65 million if specific development objectives are met before July 1, 2002, or $40 million if achieved within one year thereafter. The transaction substantially improves Triton's cash position, with the company expecting to book a third-quarter after-tax gain of approximately $63 million.

Key Takeaways:

  • Triton Energy has closed its transaction with ARCO, securing financing for the development of its gas reserves on Block A-18 of the Malaysia-Thailand Joint Development Area (JDA).
  • ARCO has acquired 50% of the subsidiary holding Triton's interest in the JDA, with Triton receiving $150 million in payment.
  • ARCO will fund up to $377 million of the combined Triton-ARCO share of Block A-18 expenditures, related to the first phase of field development.
  • The transaction includes a performance-based payment structure, with ARCO paying Triton a further $65 million if specific development objectives are met before July 1, 2002, or $40 million if achieved within one year thereafter.
  • The deal marks a significant milestone for Triton Energy, with the company expecting to book a third-quarter after-tax gain of approximately $63 million.
  • The transaction is expected to substantially improve Triton's cash position, enabling the company to pursue its international oil and gas exploration and production projects.

Statistics:

  • $150 million: The amount ARCO paid to Triton Energy for 50% of the subsidiary holding Triton's interest in the JDA.
  • $377 million: The maximum amount ARCO will fund of the combined Triton-ARCO share of Block A-18 expenditures, related to the first phase of field development.
  • $65 million: The additional payment ARCO will make to Triton if specific development objectives are met before July 1, 2002.
  • $40 million: The additional payment ARCO will make to Triton if specific development objectives are met within one year of July 1, 2002.
  • $105 million: The amount Triton has invested in the project to date, which will be recovered on a first-in, first-out basis from the cost recovery portion of future production.

Sources:

  • Business Wire, "Triton Energy Closes Transaction with ARCO, Securing Financing for Gas Reserves Development", August 3, 1998.
  • Triton Energy Limited, Press Release, "Triton Energy Limited Completes Transaction with ARCO".