Continental Energy has farmed out a 90% share of its interest in the Yapen Block offshore Irian Jaya Indonesia to PT Exspan Yapen a subsidiary of the Medco Energi Internasional. Continental Energy's 60% owned subsidiary, Continental Energy Yapen Ltd., will retain a fully carried 10% stake in the Yapen Block PSC.
Medco currently produces approximately 85,000 barrels per day of oil and 100 million cubic feet per day of natural gas.
In accordance with the farm out agreement PT Exspan Yapen has agreed to:
- Pay approximately US$ 600,000 to discharge Continental Energy Yapen Ltd. accrued liabilities up to the farm out date;
- Pay for all exploration work commitments necessary to maintain the Yapen PSC in good standing with the Indonesian government; including an obligation to drill at least one exploration well on the Yapen PSC;
- Pay 100%, and thereby "Carry" the share of all Yapen PSC exploration and drilling costs and expenses attributable to the 10% Yapen PSC working interest retained by Continental Energy Yapen Ltd. from the farm out until any "Plan of Development" for the exploitation of the first of any commercial oil or gas discovery is approved in writing by Indonesian authorities; and
- Assume the roll of Operator for the Yapen PSC.
The assignment of Yapen PSC interest is subject to approval of Indonesian national oil and gas regulatory authorities which is expected in due course. Continental Energy Yapen Ltd. was formerly named Apex (Yapen) Ltd.
The Yapen Block consists of a single contiguous area occupying 9,500 square kilometers.