JAKARTA (TheInsiderStories) – Canadian venture exchange oil and gas publicly traded company, Sonoro Energy Ltd. (TSXV: SNV) has entered into a strategic alliance agreement with one of Indonesia’s largest companies to develop oil and gas activities in Budong Budong Production Sharing Contract (PSC) as joint partners, it said on Tuesday (11/09).
This strategic relationship is focused on the pursuit of activities related to the Budong-Budong project in West Sulawesi also includes other conventional oil and gas opportunities in Sumatra.
Sonoro declined to inform the company name but admitted the Indonesian entity is engaged in a diversity of businesses including property development, plantation ownership as well as trading both domestically and internationally.
Followed the partnerships agreement, the Toronto-based company hoping to get the extension permit of its Indonesian unit soon.
Last July, Sonoro has announced that the Ministry of Energy and Resources Mineral (MEMR) has declined its second request for an extension of the Budong Budong PSC. The company said, both requests for extension had been supported by Special Task Force for Upstream Oil and Gas Business Activities.
The consortium of the joint cooperation will continue to seek this extension from the Indonesian government under the current PSC arrangement. There can be no assurance that project extension will be granted.
In addition, the joint cooperation intends to submit a joint bid in response to Indonesia’s conventional Oil and Gas 2nd Bidding Round for October 2018. If successful in its bid Sonoro will have an interest ranging between 25 percent to 49 percent and will act as operator.
Specific details about the new project and the Indonesian company will be provided if and when the joint cooperation is awarded the project or if and when Budong Budong PSC is granted an extension of its term, said Sonoro.
The Company also announces that Chris Atkinson, the current Chairman of the company, will assume the role of interim CEO with the resignation of Richard Wadsworth from his position. Dean Callaway, current chief financial officer will join the board as a director of the company.
Atkinson commented, “We are pleased to have the opportunity to become joint venture partners with one of Indonesia’s most successful private investment groups which has had an impressive track record over their various business endeavors in Indonesia and is now seeking to repeat that success with Sonoro in the oil and gas sector.”
In March 2018, and as previously reported, Sonoro received notice through its subsidiary companies, Stockbridge Oil and Gas and Stockbridge Budong Budong that its PSC had not been extended. Since that time, Sonoro has been working with Indonesian regulator to develop a new proposal for submission to the MEMR.
Budong Budong concession commenced drilling the LG-1 Updip appraisal well in October 2017 with operations continuing for around 50 days. In November 2017, Sonoro cased the well without completing a flow test which was a result of dangerous gas kicks on site and unstable sand formations.
Continuation of the PSC was subject to renewal on Jan. 15, 2018 by the MEMR. Through these discussions, the company has now formally submitted a new request to the task force under EMR ministry.
Budong Budong PSC lies on the coast of western Sulawesi almost directly opposite Balikpapan. Initial interest in the area was related to discovery by early Dutch explorers of a giant oil seep at the end of the nineteenth century.
The Doda Oil Company drilled a series of shallow wells in a coastal location around the seep with all encountering hydrocarbons, one produced small volumes of oil from 1890-1900’s and others blew out.
Eventually the area fell into the hands of BPM (Shell) in the late 1920’s/early 1930’s. They conducted an extensive field mapping programme which lasted until the late 1930’s and identified two main surface anticlines with oil seeps (Bula Bae and Madjene).
For whatever reason they were not drilled although the pending Japanese invasion may have been a concern. The acreage lay dormant until the early 1970’s when Gulf shot some very poor quality 2D and drilled 2 stratigraphic holes from a drilling barge at the coast.
The inland area was still largely jungle at that point. One of these wells suffered a gas blow out near the old Doda wells and was abandoned at a shallow depth.
Subsequently United Kingdom’ BP farmed into the Gulf acreage. BP conducted an extensive field programme and confirmed BPM’s original findings with regards to the Bula Bae and Madjene surface structures. They also shot some poor quality coastal 2D (coastal areas being deforested at that time) and went on to drill what turned out to be a ghost feature on the 2D (Tike-1 well) which drilled the steeply dipping flank of a monocline.
BP then switched attention to South Sulawesi and the area was forgotten about and not re-awarded untill Tately and Harvest entered the picture in 2001. They drilled two wells at a cost of over $80 million (sunk cost pool now) without reaching the Eocene.
They bypassed the shallow structures. Fortunately they drilled the LG-1 well on flank of a shallow 4-way structure (not Bula Bae or Madjene) defined by their new 2D grid. The top 750 metres of this well had great oil and gas shows, significant pore pressures and actually blew out at one point.
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