Lion Energy announced on 12 December 2018 a conditional sale and purchase agreement for the acquisition of the 16.5% stake owned by Gulf Petroleum Investment Company (GPI) in the Seram (Non-Bula) PSC, located in onshore/offshore Seram island. Upon completion, Lion will have increased its participating stake in the block from 2.5% to 19%, via wholly-owned subsidiary Seram Energy Pte Ltd.  The total purchase price is USD 44 million, subdivided into USD 32 million upfront payment and contingent payments of USD 7.2 million (within four months from Plan of Development approval for the Lofin gas discovery) and USD 4.8 million (within four months from first commercial gas production).  Lion is in discussions to secure funding towards the upfront payment prior to obtaining shareholdersâ approval. Completion of the deal is likewise subject to other conditions to be met by 11 December 2019, including customary approvals from Indonesian regulator and PSC partners, as well as Lion providing a corporate guarantee for the contingent payments. Upon completion, the effective date of the transaction will be 1 November 2018.  The proposed transaction will strengthen Lionâs position in the area, as the company was also awarded 100% interest in the East Seram exploration block in May 2018, following Indonesiaâs Conventional Oil and Gas Bidding First Round 2018.  The other partners in the Seram (Non-Bula) PSC are CITIC (41%, operator), PT Petro Indo Mandiri (30%) and PT GHJ (10%). The PSC is due to expire on 31 October 2019, however on 31 May 2018 the partners signed a new gross split contract to continue operations in the block for a new 20-year term. Signature bonus for the new contract was USD 1 million. The operator has committed to invest approximately USD 49 million for the first five years of the new contract.  The Lofin discovery is estimated to contain 2 Tcfg in place within Manusela carbonates. The 20-year contract extension is expected to allow for full development of the discovery. Additionally, the block is producing oil from the Oseil and satellite fields, with a rate of approximately 2,000 b/d as of mid-2018.  Background Information    Seram (Non-Bula) PSC History    Located onshore on the Seram island, the Seram PSC was awarded to Gulf and Western Indonesia Inc (G&W) on 1 November 1969 in order to re-habilitate the Bula oil field which had been damaged during World War II. After drilling nine unsuccessful shallow exploration wells and carrying out re-habilitation work and limited development drilling on the Bula field, G&W assigned the PSC to Associated Australian Oilfields NL (AAR) in 1972. AAR shot seismic but did not drill and CSR acquired AAR in 1978. CSR drilled seven exploration wells and undertook development work at Bula.  A Kufpec-led group farmed-in for exploration rights in 1985 but the Bula field, covered by an area of 35 sq km to a sub-sea level of 600m, was excluded from the deal. Kufpec concentrated on the deeper potential of the PSC.  On 11 July 2006, CITIC announced that it had entered in a USD 97.4 million sales purchase agreement to acquire a 51% operating stake in the Seram PSC Extension from operator Kufpec.  In February 2018, CITIC agreed to sell a 10% participating interest to PT GHJ, an independent local company. Later, in Q2 2018, Kufpec divested its interest in the block to another local company, PT Petro Mandiri.  Lofin gas discovery    CITIC suspended Lofin 1 ST1 wildcat as a gas with oil/condensate discovery in mid-December 2012. The well encountered more than 160 m of hydrocarbon column in the Jurassic carbonates of the Manusela Formation. The well flowed at a final rate of 15.7 MMcf/d with 171 bbl/d cumulative oil/condensate (36.1Â° API). Lofin 1 was spudded on 17 January 2012.  Appraisal well Lofin 2 was spudded on 31 October 2014. The well had initial PTD of 5,425 mMD/5,321 mSSTVD, targeting the Manusela Formation. The well was drilled to a final TD of 5,861 mMD (5,686 mSSTVD). In an attempt to collect good reservoir data, a seven days multi-rate test using different choke sizes was conducted by the operator. The test recorded 17.8 MMcf/d of gas with 2,634 b/d of water and completion fluid and 54 b/d of 34.4Âº API condensate/oil with a flowing wellhead pressure of 2,250 psi over 96 hours flow period on 52/64â choke. A 12 hours flow period on 16/64â choke was also conducted which has recorded 4.95 MMcf/d of gas with 12 b/d of condensate with 280 b/d of water with wellhead pressure of 5000 psi.  Lofin 2 intersected a total gas column of up to 1,300 m.
Indonesia, Seram (Non-Bula) PSC Extension