Coro Energy with Conrad Petroleum and Empyrean Energy have received the required regulatory approvals for Coro's 15% acquisition in the Duyung PSC, located in the West Natuna Basin, on 22 May 2020. The new interest holding in the block is composed by Conrad (76.5%, operator), Empyrean (8.5%) and Coro (15%).   In February 2020, the partners extended the long stop date for the transaction to 30 June 2020, in view of the delayed government approval which was initially due by 31 December 2019.  Coro completed the required payment to Conrad and Empyrean on 16 April 2019. The final outstanding payment made to the existing partners amounted to USD 1.2 million in cash, USD 9.3 million as a contribution towards the 2019 drilling campaign, plus the issuance of 60,905,037 new Coro shares with a value of USD 1.85 million. Conrad and Empyrean received the payments pro-rata, based on the initial participation in the PSC of 90% by Conrad and 10% by Empyrean.  By the time of the initial sale and purchase agreement on 11 February 2019, Coro paid USD 1.75 million of the total cash consideration, plus USD 1.2 million towards the 2019 drilling campaign. The balance payment from Coro was due by 31 December 2019.  The total consideration payable by Coro included USD 4.8 million (consisting of USD 2.95 million in cash and USD 1.85 million in Coro shares), plus a contribution of USD 10.5 million to partially fund the exploration drilling programme.  Prior to the Coro farm-in, the block was operated by West Natuna Exploration Limited (WNEL), a subsidiary owned by Conrad (90% shares) and Empyrean (10% shares). WNEL has now transferred all of its interest in the block to the respective companies.  The block includes the Mako field, estimated to contain 2C gas resources of 276 Bcf and 3C resources of 392 Bcf. A Plan of Development (POD) for the field was approved by authorities in March 2019 and a Heads of Agreement with a Singapore gas buyer is in place. The gas will be likely exported via the West Natuna Transportation System (WNTS).  The drilling campaign conducted in 2H 2019 consisted of two wells, Tambak 1 and Tambak 2, which confirmed the presence of an extensive gas reservoir across the Mako structure. The first well in the campaign, Tambak 2, intersected approximately 10 m of Muda Formation sandstones, but did not flow due to formation damage sustained following a gas kick and mud loss. The second well, Tambak 1, tested 11.4 MMcf/d of dry gas from the Muda Formation between 389 and 391 m TVDSS.  On 17 January 2019, Conrad and Empyrean signed an amendment of the Duyung PSC to convert the existing contract to Gross Split terms. Following the contract amendment, the operator submitted a revised POD for the field. The original POD had been submitted to authorities in August 2018.  Background Information  The Duyung PSC was originally awarded to Transworld (100%) in January 2007. The block was offered under the direct mechanism during the second phase of the "Fifth Round" of Migas-controlled acreage releases which opened on 15 August 2006. A signature bonus of USD 1.5 million was paid and firm commitments included G&G studies worth USD 1 million, acquisition of 400 sq km 3D seismic data and drilling one exploration well. The seismic commitment was conducted from late 2008 to early 2009 using PGS's 'Orient Explorerâ vessel. Around 360 sq km of data was acquired.  WNEL acquired 100% interest in the block in 2013. In September 2015, WNEL had agreed to farm out 85% interest to Hague and London Oil, however the agreement was terminated as of 1 April 2016 due to lack of the necessary regulatory approvals.    On 12 May 2017, Empyrean reported the completion of the first stage of a proposed deal with Conrad Petroleum for the acquisition of a 10% stake in WNEL for an initial consideration of USD 2 million, pursuant to a Sale and Purchase Agreement (SPA) signed on 4 April 2017. Under the terms of the SPA, Empyrean had the option to pay further cash consideration of USD 2 million that would grant the company an additional 10% interest in WNEL. However, Empyrean reported on 30 May 2017 that it would not proceed to acquire the additional 10% interest, thus retaining only the initial 10% stake in WNEL while Conrad Petroleum retained the remaining 90% stake plus operatorship.    The Mako structure is estimated to have a lateral extent of 304 sq km with tested reservoir of approximately 7 m of fine sand layer within the Intra Muda Formation. In August 2018, Empyrean reported that modeling studies on the field indicated estimated gas initially in place (GIIP) of 705 Bcf, with upside potential case of 1,317 Bcf. The company at the time also reported recoverable contingent resources of 433 Bcf (2C) and 646 Bcf (3C).  The structure was originally drilled in 1999 by Lasmo with wildcat Mako 1, which encountered 7 m gas-bearing sandstones from logs, but was not tested. The structure was reinvestigated in mid-2017 by WNEL, with Mako South 1. The well flowed gas at a stabilized rate of 10.9 MMcf/d, with no CO2 recorded. According to the operator, test results indicated a laterally continuous reservoir with permeability in the order of multi-Darcy. The well reached a depth of 1,330 feet (approximately 405 m) on 19 June 2017.
Coro Energy with Conrad Petroleum and Empyrean Energy have received the required regulatory approvals for Coro's 15% acquisition in the Duyung PSC, located in the West Natuna Basin