Andaman 2 production sharing contract (PSC) in the Malacca Strait - Photo: Privacy

JAKARTA (TheInsiderStories) – Singapore’s KrisEnergy Ltd., has revealed British multinational oil and gas company BP as the potential buyer of its 30 percent non-operated interest in the Andaman 2 production sharing contract (PSC) in the Malacca Strait, the company announced today (11/19).

“The company announces that it has entered into a conditional sale and purchase agreement with BP Exploration Operating Company Limited for the disposal, subject to obtaining all necessary approvals including from the government of Indonesia for the assignment of the working interest,” KrisEnergy said in a written statement.

The disposal comes after taking into consideration the future exploration cost and risks associated with deepwater activities. The board believes it is more prudent to allocate KrisEnergy’s limited capital to funding near-term development, it said.

The company adding that there is no certainty or assurance as at the date of this announcement that the disposal will be completed. Shareholders, noteholders and potential investors of the company should exercise caution when dealing in the company’s securities.

“Stakeholders and potential investors who are in doubt as to the action they should take should consult their stockbrokers, bank managers, solicitors, accountants or other professional advisors,” it said.

Last month, KrisEnergy has announced that it has accepted a binding letter of offer from an undisclosed “major international oil and gas company” for the sale of its 30 percent non-operated working interest in an Andaman 2.

A PSC is an agreement between one or more investors and the government, which grants corporates rights over an oilfield for a specific period. The Andaman 2 PSC meanwhile, is an exploration block over the North Sumatra Basin covering an area of 7,400 square kilometers, the upstream oil and gas firm said in a regulatory update.

The firm’s board felt it was “more prudent” to allocate KrisEnergy’s limited capital to fund near-term development, after considering future exploration costs and risks associated with deepwater activities.

KrisEnergy said the disposal is in line with the group’s risk mitigation and intention to reduce exposure to exploration capital expenditure. It is also part of its strategy to focus its “limited financial resources” on optimizing operations at existing assets in Bangladesh and the Gulf of Thailand, along with the development of the Apsara oilfield in Cambodia block A.

“The disposal is in the company’s ordinary course of business and does not change the company’s risk profile,” KrisEnergy added.

The disposal’s completion is subject to all necessary approvals from the Indonesian government for the assignment of the working interest, and satisfactory due diligence by the purchaser. The disposal terms indicated in the letter of offer are also subject to certain assumptions and the execution and delivery of a definitive sale and purchase agreement.

The long stop date for the disposal is March 31, 2020, with the proceeds of the sale payable upon completion. Shares of KrisEnergy have been suspended since Aug 14.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com