Niko Reports on Developments at its Indonesia, Madagascar PSCs

Canada's Niko Resources Ltd. announced that it has executed two sets of agreements which, subject to the required government approvals, will provide proceeds of nearly $38 million (CAD 40 million).

Farm-out of Grand Prix PSC in Madagascar

Niko has signed a definitive farm-out agreement under which OMV, an integrated international oil and gas company, will earn a 40 percent interest in the Grand Prix Production Sharing Contract (PSC) in Madagascar, with Niko retaining a 35 percent working interest. Closing of the deal is subject to the approval of the Government of Madagascar.

Other Arrangements for Semai V and Kofiau PSCs in Indonesia

Niko has also signed a definitive agreement with Hess Corporation for certain consideration in exchange for assuming a 100 percent interest in the Semai V PSC, located offshore Papua province in eastern Indonesia. Two wells have been previously drilled in the block, Andalan 1 and 2, with one future commitment well yet to be drilled. Drilling results from these wells indicate hydrocarbon potential remaining on the block. The Company also signed an agreement to increase its working interest (effective prior to the drilling of the Elit-1 well discussed below) to 100 percent in the Kofiau PSC, also located offshore Papua province, for nominal consideration. The closings of these transactions are subject to the approval of the Government of Indonesia.

Indonesia Exploration Updates

Elit-1 Well

The Elit-1 well, located in the Kofiau PSC offshore Papua province in eastern Indonesia, has been drilled in water depth of 1,335 feet to a total depth of 3,915 feet in 9 days by Diamond Offshore’s Ocean Monarch (UDW semisub), under budget and ahead of schedule. The well encountered 10 feet of gas at the top of a 90 foot sand package and has been plugged and abandoned.