North Sumatra Block-A Heads of Agreement
PT Medco E&P Malaka has signed a Heads of Agreement ("HoA") for gas sales with PT Pupuk Iskandar Muda, which is located at the Province of Nanggroe Aceh Darussalam, to supply gas from Block A (PSC) to PIM-1 AND PIM-2 installations.
As stated in the HoA, the Company is targeted to supply gas for 110Bbtu per day for the period of 7 years starting from 2010 to 2017 to PIM Fertilizer Plant.
The floor price proposed by MedcoEnergi for this gas supply will be subject to the current price of urea fertilizer.
The gas will be delivered from 3 (three) fields namely Alur Rambong field, Julu Rayeu field and Alur Siwah field, through a 100 km pipeline from Block A.
The HoA is expected to be followed by the Sales Purchase Agreement ("SPA") before the end of the year 2007.
Block A is situated in East Aceh Regency, Nanggroe Aceh Darussalam Province, operated by Medco E&P Malaka.
The composition of participating interests of the owners of the block is as follows:
> PT Medco E&P Malaka 41.67% Premier Oil Sumatra (North) BV 41.66% Japex Block A Ltd. 16.67%"
Simon Lockett, Premier's Chief Executive, commented:
"We are pleased to announce the signing of the Heads of Agreement for gas from North Sumatra Block A. When the project comes onstream in 2010, it will add 10,000 boepd and make a significant contribution to Premier's production target of 50,000 boepd. The increase of our equity in this Block as announced in January 2007 is a good example of our acquisition strategy to add significant value in areas that we know well, and the Block has significant potential for further incremental development and exploration opportunities."
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