KrisEnergy Ltd. (KrisEnergy or the Company), an independent upstream oil and gas company, announced Tuesday that it has agreed to acquire from Premier Oil Overseas B.V. (Premier) its entire 41.6666 percent working interest in the Block A Aceh production sharing contract (PSC) in Indonesia where several gas condensate discoveries are expected to go into the development phase after completion of the acquisition.
KrisEnergy will acquire 100 percent of the issued share capital of Premier Oil Sumatra (North) B.V. in exchange for a total after-tax consideration of $40 million subject to working capital adjustment. The consideration will be settled by a combination of cash proceeds and repayment of Premier intercompany debt. Completion of the transaction will be subject to receipt of all government approvals.
PT Medco E&P Malaka is the operator of the PSC with a 41.6667 percent working interest while Japex Block A Ltd. holds the remaining 16.6667 percent.
Block A Aceh, located onshore Sumatra in the semi-autonomous region of Aceh, covers an area of 720 square miles (1,867 square kilometers) and contains several gas condensate discoveries including the Alur Rambong, Alur Siwah and Julu Rayeu fields, which were approved for development in 2007. First gas from Alur Rambong is anticipated in 2017. The block also contains the Matang gas discovery, which requires further appraisal prior to being developed via tie-back to the initial facilities, and the high-carbon dioxide Kuala Langsa gas discovery.
Best estimate contingent resources (2C) in the development pending category associated with the Alur Rambong, Alur Siwah and Julu Rayeu fields to the Company’s working interest are 29.2 million barrels of oil equivalent (MMboe) as at Dec. 31, 2013 as assessed by Netherland, Sewell & Associates, Inc. (NSAI). The PSC also contains working interest 2C resources in the development unclarified category of 74.4 MMboe with Kuala Langsa accounting for 87.6 percent. Following completion of this transaction, KrisEnergy’s total working interest 2C resources will increase to 172.1 MMboe from 68.6 MMboe as estimated by NSAI as at Dec. 31, 2013.
Richard Lorentz, director Business Development, commented: “This is a significant transaction for KrisEnergy given the size of the resource base. This will be a substantial gas project that complements our gas commercialization plans offshore East Java and Kalimantan, and adds to building our position in Sumatra, where we are the operator of the offshore East Seruway exploration PSC.”
Sweet gas from Alur Rambong will be produced first, followed by sour gas from Alur Siwah. The Matang field is anticipated to come on stream when Alur Siwah declines from plateau. The development project involves the construction of a 63 billion British thermal units per day gas plant for carbon dioxide and hydrogen sulfide removal. Gas sales are envisaged from the Alur Siwah and Alur Rambong fields with fuel gas provided by Julu Rayeu.
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