CBM Asia Development has acquired majority interest in two coalbed methane production sharing contracts (PSC) in Indonesia, increasing its total gross acreage in the country by 93% to 2,799 km2. In addition, the Company has applied to the Indonesian government for extensions to both new blocks, which are anticipated to add a further gross area of 2,564 km2, and paid signature bonuses of USD$1.0 million per PSC thereto. Both agreements require the Company to, among other things, fund 100% of the costs of the first 3 years' firm exploration program commitment under the applicable PSC up to a maximum of USD6.5 million per PSC and reimburse the vendors for certain direct and other costs.
CBM Asia's Chairman Scott H. Stevens noted, "We are excited about the prospects for these two acquisitions, including the extensions under application at both blocks. Together with the extensions, these acquisitions exceed our previously announced LOI (May 12, 2011). The Hulu PSC in Central Sumatra targets coal seams that are age-equivalent to those at the Sekayu PSC, where the Company recently reported positive results. Drilling by other operators in East Kalimantan, particularly BP's recent confirmation of that they have achieved CBM-to-LNG export, four years ahead of Australia, confirm the CBM potential there. As operators of these two blocks we will be able to dictate the pace of exploration and development."
Central Sumatra PSC: The first block acquired is the 519-km2 Hulu PSC in Central Sumatra. The Company holds a 70% participating interest and is the operator. PT Samantak Mineral Prima holds a 30% participating interest. The block is adjacent to the Trans Sumatra gas pipeline and close to the Chevron-operated Duri oil field steam flood operation, a major gas consumer which offers premium gas pricing. The extension would increase the gross area to approximately 1,983 km2.
East Kalimantan PSC: The Company has also acquired a 70% participating interest and operatorship in the 830-km2 Bentian Besar PSC in East Kalimantan. PT Ridlatama Mining Utama holds a 30% participating interest. The block is located west of the Company's Kutai West PSC holdings and the BP-ENI Sanga-Sanga PSC, which recently began selling CBM to the Bontang LNG facility for export. The extension would increase the gross area to approximately 1,930 km2.
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