Harvest Natural Resources has acquired a 47 percent interest in the 1.35 million acre Budong-Budong Production Sharing Contract (PSC) located onshore West Sulawesi, Indonesia, from Tately Budong-Budong N.V. (Tately). Tately is a subsidiary of Pexco N.V.
The acquisition is subject to approval by the Indonesian government authorities, including BPMigas, Indonesia's oil and gas regulatory authority. During the first three-year exploration phase of the PSC beginning January 2007, Harvest and Tately expect to acquire, process and interpret approximately 500 kilometers of 2D seismic and drill two exploration wells.
The expected cost of this program is $22 million of which Harvest will fund the first $17.2 million plus it's pro rata share of subsequent costs. Tately will operate through the exploration phase of the PSC. Harvest has the option to assume operatorship upon approval of a plan of development for any commercial discovery, subject to BPMigas approval.
Harvest President and Chief Executive Officer, James A. Edmiston, said: "Budong-Budong provides Harvest with exposure to significant resource potential in a basin with a demonstrated active petroleum system and abundant oil and gas seeps. Recently completed multi-client seismic surveys by a number of global integrated companies have improved the understanding of the geology and enhanced the prospectivity of the West Sulawesi foldbelt and by analogy, the sparsely explored onshore area of the foldbelt."
Edmiston continued, "The high-impact exploration opportunities in the Budong-Budong PSC in Indonesia and our recent entry into offshore Gabon through the agreement to acquire a 50-percent operated interest in the Dussafu Marin PSC are ideal complements to our lower-risk Venezuelan development opportunities. The growth opportunities in both the Budong-Budong and the Dussafu PSCs are consistent with our strategy to develop a more diverse asset portfolio with a focus on highly-proven hydrocarbon provinces."
The Budong-Budong PSC contains Indonesian frontier terms with a net after-tax production sharing split of 35 percent contractor and 65 percent Indonesian government for oil and 40 percent contractor and 60 percent Indonesian government for natural gas. The effective date of the PSC is January 2007. The PSC has a 30-year term with an initial six-year exploration phase with an option for a four-year exploration extension.
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