Talisman to Acquire 51% Stake in East Jabung PSC in South Sumatra
Canada's Pan Orient Energy Corp. (Pan Orient or the Company) announced Tuesday that it has entered into an agreement for the transfer of a 51 percent direct working interest and operatorship of the onshore East Jabung Production Sharing Contract (PSC) in South Sumatra, Indonesia to a wholly owned subsidiary of Talisman Energy for a consideration of:
- an upfront cash payment of $8 million (CAD 9.2 million)
- a firm commitment to fund the first $10 million (CAD 11.4 million) towards the first exploration well in addition to all related G&A and overhead costs incurred by the operator until the first $10 million expenditure has been completed, and
- a Pan Orient option to acquire a 20 percent working interest in a Talisman operated South Sumatra, Joint Study Area
- a contingent commitment to fund the first $5 million (CAD 5.7 million) towards an appraisal well, if justified, in addition to all associated G&A and overhead incurred by the operator until the first $5 million expenditure has been completed
The transaction is subject only to Government of Indonesia approval and is anticipated to close upon the receipt of this approval, anticipated approximately March 2015.
Pan Orient's belief that Talisman as a partner, given their significant presence, infrastructure and experience in South Sumatra, provides the best option towards rapid monetization of any hydrocarbon discovery at East Jabung, played a substantial non-monetary role in the company's decision to select this transaction, which was among a number of other possibilities.
Pan Orient President and CEO Jeff Chisholm said, "Pan Orient has demonstrated significant progress towards the corporate initiative of strengthening the Company's balance sheet and de-risking its portfolio of assets, through partial sale or seeking partners. The final goal is to retain meaningful working interests with significant upside exposure and a strong balance sheet, facilitating growth and flexibility going forward. Today's announcement is a significant milestone towards this goal and is an important addition to the sale agreement of a 50 percent interest in the Thailand L53/48 asset entered into and announced last week."
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