POE.V Pan Orient Energy Corp. has purchased, through a series oftransactions, an operated 90-per-cent working interest in the3,989-square-kilometre Batu Gajah production sharing contract (PSC),located onshore south Sumatra, Indonesia. Total consideration in thetransaction is $6-million (U.S.) cash with the vendor, Ranhill Berhadand its related group of companies, retaining a 10-per-cent carriedworking interest through to first commercial oil or gas production.
PanOrient has also purchased a 90-per-cent operated interest in the PamaiTaluk joint study area (JSA). Under the terms of the joint studyagreement between Ranhill and the Indonesian licensing authority MIGAS,Pan Orient will now have the right to match any offer made on theapproximately 6,200-square-kilometre south/central Sumatra proposedPamai Taluk PSC, located onshore south/central Sumatra, during theupcoming Indonesian licensing round that is anticipated to be announcedin June/July, 2008. Total consideration is $1-million (U.S.) cash withRanhill retaining a 10-per-cent carried working interest through tofirst commercial oil or gas production.
The Batu Gajah PSC andPamai Taluk JSA assets were divested as a result of the strategicrationalization initiative of Ranhill Berhad, a large Malaysiancorporation specializing in infrastructure development and engineering,to restrategize its oil and gas business with a view to focusing ondownstream engineering activities and investment in proven andproducing oil and gas assets.
Batu Gajah PSC
The3,989-square-kilometre Batu Gajah PSC is located in south Sumatradirectly adjacent to and/or surrounding 13 oil and gas discoveriescurrently producing approximately 60,000 boe per day from the JabungPSC that is operated by PetroChina. It was announced in 2007 inStockwatch that PetroChina would be budgeting approximately$350-million (U.S.) to explore and further develop the area. ExistingInfrastructure is well established with the main Sumatra-Singapore gasexport pipeline and the Corridor to Duri gas pipelines running throughthe Batu Gajah PSC. On offshore oil-loading terminal exists along theSumatra coast directly adjacent to the Batu Gajah PSC.
The BatuGajah PSC was awarded to Ranhill on Jan. 16, 2007 after Ranhillexercised their right of first refusal on the high bid made byPetroChina in the preceding Indonesian licensing round. Under the termsof the PSC, Ranhill paid a $4-million (U.S.) signature bonus andcommitted to 500 kilometres of 2-D seismic, 400 square kilometres of3-D seismic and the drilling of three wells to be completed over athree-year period with estimated expenditures of approximately$29.75-million (U.S.). To date, none of the proposed work program hasbeen initiated on the PSC. Upon completion of the firm three-year workprogram and required partial relinquishment, the operator has theoption to continue on a year-by-year renewal basis for up to anadditional seven years.
Six prospects and leads have beenidentified on the PSC using a course grid of 2-D seismic data. Seismicmapping suggests a number of the PetroChina fields extend on to the PSCwith wells drilled, in at least one case, right on the concessionboundary.
Pan Orient may, subject to government approval andfurther work, conduct 2-D/3-D seismic acquisition in 2008 followed bythe drilling of three wells in 2009.
Pamia Taluk JSA
Theapproximately 6,200-square-kilometre Pamai Taluk JSA is located east ofthe Barisan mountain front straddling both the south and centralSumatra basins. The acreage was formerly explored in the 1970s to 1980sby a consortium of Exxon and Mobil. The existing seismic data coverageand well control is sparse and the area very underexplored. Furtherdetails will be provided after the June-July, 2008, Indonesianlicensing round and in the event Pan Orient exercises their right offirst refusal on the highest bid.
