Home News UK’s Coro Energy Acquires 15% of Indonesian Duyung PSC

UK’s Coro Energy Acquires 15% of Indonesian Duyung PSC

Duyung PSC Located in the West Natuna Basin, Indonesia - Photo by the Company

JAKARTA (TheInsiderStories) – British’ energy producer, Coro Energy Plc announced to acquire 15 percent participating interest in the Duyung Production Sharing Contract (PSC), which contains the Mako gas field, located in West Natuna Basin. 

The Duyung PSC is 100 percent owned and operated by West Natuna Exploration. The operator shareholders consist of Singapore’ Conrad Petroleum (90 percent) and Empyrean Energy (10 percent).

James Menzies, Chief Executive Officer said in a written statement, the company was signed a binding conditional agreement with West Natuna Exploration. 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.

Menzies commented: “Mako is a high quality asset with a great address: a large undeveloped resource in a prolific basin and close to existing infrastructure with capacity, providing access to a hungry market in Singapore. This is very significant, high value, low risk step out exploration located above and beneath the field itself.”

He added, the field development plan has been submitted to the Indonesian authorities for approval. 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 today 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.

To finance the acquisition planned, Coro Energy’ cornerstone investors will subscribe a €22.5 million Eurobond issue. Details on the terms of the Eurobond and the subscription and underwriting commitments have been announced separately.

Menzies explained, a drilling campaign is being planned for 2019 and a test of the Tambak prospect is to be a part of the programme.

Following on from Coro Energy’ entry into the Bulu gas field earlier this year, 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.

Previously, In 2018,  a London listed company has acquired a 42.5 percent stake in the Lengo gas field offshore in East Java for around $12 millionThis the first acquisition by the United Kingdom’ based company in Indonesia .

The gas block is in the shallow water Bulu PSC which contains the Lengo gas field. Coro said, the field development plan has been approved by the Indonesian authorities. The company targeting the Tuban industrial complex in East Java as the gas buyer for Lengo gas field. Its predicted the project will need costs $100 million.

Coro is stepping in to a deal that was originally agreed between New Zealand’ AWE (Satria) NZ Ltd, a subsidiary of AWE Limited and HyOil (Bulu) Pte. Ltd, a subsidiary of HyOil Pte. Ltd based in Singapore.

Under these agreements, Coro will pay HyOil up to $4 million in Coro shares and will pay AWE a total of approximately $8 million in cash to cover the purchase price, cost reimbursement and other working capital adjustments.

As a result of these transactions, Coro will become a direct 42.5 percent holder of 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.

The Bulu PSC has a term of 30 years and is due to expire in October 2033. The PSC is located in water depths of approximately 60 meters. The Lengo gas field was discovered in 2008 by the Lengo-1 well which tested at a rate of 12.9 MMscfd and successfully appraised in 2013 located in Lengo-2 well which flow tested at over 21.2 MMscfd. A plan of development was submitted and approved in November 2014.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com