Coro Energy Plc., (LSE: GB00BJQR7736), the Southeast Asian focused upstream oil and gas company, announced has get approval to completes the acquisition of 15 percent direct interest in the Duyung PSC from West Natuna Exploration Ltd., it said last week - Photo by the Company

JAKARTA (TheInsiderStories) – Coro Energy Plc., (LSE: GB00BJQR7736), the Southeast Asian focused upstream oil and gas company, announced has get approval to completes the acquisition of 15 percent direct interest in the Duyung PSC from West Natuna Exploration Ltd., it said last week. The license holders of the the block are now the company, Conrad Petroleum Ltd., (76.5 percent) and Empyrean Energy Plc., (8.5 percent non-operated interest).

“The company looks forward to the publication of the revised independent reserve audit report from Gaffney Cline & Associates which is expected to be announced later in the month,” said the producer on Friday (05/22).

The Duyung PSC is 100 percent owned and operated by West Natuna Exploration. The Mako gas field’ commercial viability was demonstrated by the Mako South-1 well drilled by West Natuna Exploration in 2017 to the core and test the Mako reservoir, flowing up to 10.8 MMscfd of dry gas on test.

The CEO, James Menzies said, the company was signed a binding conditional agreement with West Natuna Exploration last year. Under the agreement, Coro Energy will pay a cash and shares consideration of US$4.8 million and contribute $10.5 million toward the 2019 drilling campaign, in order to earn a 15 percent stake in the Duyung PSC. The values representing an effective acquisition price of $0.34 per MMBtu.

The field is located close to the West Natuna Transportation System offering the potential to sell gas into the Singapore market, where a heads of agreement has been recently signed with a gas buyer. Favorable gas pricing in the developed Singapore market, with piped gas competing with LNG import.

Coro Energy has paid a total of $2.95 million in cash (comprised of $1.75 million of the West Natuna Exploration cash consideration and $1.2 million of drilling campaign contribution), which shall be treated as a break fee in the event the company fails to complete. Following on from its entry into the Bulu gas field earlier of 2019, the company’ next step is directly in-line with its strategy of building a Southeast Asian portfolio of fields with associated exploration upside.

The energy producer intends to further build on these positions in the East Java and West Natuna basins and to continue to seek out these value accretive deals. In 2018, a London listed firm has acquired a 42.5 percent stake in the Lengo gas field offshore in East Java for around $12 million

This the first acquisition by the UK’ based company in Indonesia. The initial consideration payable included a cash of $6.96 million and the back costs and other working capital around $1.04 million, which were both to be paid by Coro Energy in cash to Australian AWE Limited and up to $4 million in new ordinary shares to Singapore’ HyOil (Bulu) Pte. Ltd.

Under the revised acquisition terms, the energy producer firm will pay in four tranches. First tranche, the company will pay $2.5 million, which will include $1.46 million in cash plus the reimbursement amount. Second tranche with worth of $1.5 million on Sept. 1, 2020.

Then, third tranche worth of $2.5 million on the sooner of Bulu PSC partners agreeing the final investment decision to proceed with the financing, development and construction of the project pursuant to the approved plan of development or July 1, 2021.

Moreover, Coro Energy to pay another $1.5 million on the sooner of the date of commencement of commercial production from the Bulu PSC or  Dec. 31, 2022. All other terms oremain as originally planned, including the payment of the equity payable to HyOil in three tranches.

In the beginning, the energy player will pay the shares with worth $2 million by the issue of 42.43 million new ordinary shares of the company at 3.6255 pence each, being equal to the 30 day volume weighted average price of the shares at the time of announcement of the acquisition on Sept. 3, 2018.

Next, Coro Energy pay another $1 million in new shares following the start of commercial production from the field. These ordinary shares to be issued at the closing price as reported on LSE on the date falling five months and three weeks from production start-up. 

The company targeting the Tuban industrial complex in East Java as the gas buyer for Lengo gas field. The regional gas prices currently in the range of $5.50 to $8 per MMBtu. Its predicted the project will need costs $100 million.

As a result of these transactions, Coro Energy will become a direct 42.5 percent holder at the Bulu PSC. The remaining 57.5 percent participating interest in the Bulu PSC is held between sole operator Kris Energy 42.5 percent and two local partners, Satria Energindo 10 percent and Satria Wijaya Kusuma 5 percent.

Written by Staff Editor, Email: theinsiderstories@gmail.com