As reported on 11 February 2019, Conrad Petroleum and Empyrean Energy have agreed with Coro Energy on a deal by which Coro will acquire a 15% participating interest in the Duyung PSC, located in the West Natuna Basin. The total consideration payable by Coro will include USD 4.8 million (including 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 planned for 2019.  Conrad and Empyrean currently participate in the PSC with 90% and 10% interests respectively, through operating subsidiary West Natuna Exploration Limited (WNEL). Upon completion of the transaction (contingent to regulatory approval), the new interest holders in the block will be Conrad (76.5%), Empyrean (8.5%) and Coro (15%) via direct ownership, as WNEL will transfer all of its interest to the respective companies.  By the time of the agreement, Coro has 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 is due by 31 December 2019.  The block includes the Mako field, estimated to contain 2C gas resources of 276 Bcf and 3C resources of 392 Bcf. The operator submitted a Plan of Development (POD) for the field in 2018, and has signed a Heads of Agreement for gas sales to a Singapore buyer.  The planned drilling programme includes one well targeting the Tambak prospect (formerly âMako Deepâ), scheduled for 2019, and one shallow appraisal well in the Mako field (âMako Shallowâ). Prospective resources at Tambak are estimated between 200 and 300 Bcf, with a mid-case of 250 Bcf and geological chance of success (GCOS) of 45%, within Lower Gabus sandstones. The Mako Shallow appraisal is estimated to contain 100 Bcf of additional prospective resources for the Mako field, with a GCOS of 75%.  On 17 January 2019, Conrad and Empyrean signed an amendment of the Duyung PSC to convert the existing contract from to Gross Split terms. Subsequently, the operator has submitted a revised POD which is expected to be approved in Q1 2019.  The Duyung PSC will be the second acquisition of Coro Energy in Indonesia, following the 42.5% interest in the Bulu PSC in 2018. Both blocks represent near-production assets located close to existing infrastructure with access to regional gas markets.  Background Information  The Duyung PSC was 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.    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 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.
Indonesia, Bulu PSC