AIM-listed Empyrean Energy has signed an agreement to acquire 20% shareholding in West Natuna Exploration Ltd. (WNEL) from owner Conrad Petroleum, which holds a 100% interest in the highly prospective Duyung production sharing contract (PSC) in Indonesia.
Empyrean will pay Conrad an initial cash consideration of US$2 million upon signing of a shareholders agreement, and a further $2 million on or before 12 May.
The acquisition follows the Empyrean’s recent investment in block 29/11, located offshore China in the Pearl River Mouth basin, and is the next step in building an Asian offshore oil and gas portfolio of projects which boast mature targets and significant reserve potential.
The Duyung PSC includes the Mako shallow gas discovery which, according to LEAP Energy’s Competent Persons Report, is estimated to contain 400 Bcf to 1.3 Tcf of gas in place. In addition, the permit contains a number of other drilling opportunities in a prolific proven basin with a nearby infrastructure to support any development and production.
Three previous wells drilled at Mako in 1975, 1996, and 1999 intersected the gas zones but were not flow tested. Two of these wells were targeting deeper oil and the third well, targeting gas, encountered technical difficulties and so no flow test was completed.
A new well on the Mako discovery, the Mako South1 Well, is planned to spud in late Q2 or early Q3 2017 targeting the IntraMuda sands. The objective of the well is to flow test the gas sands and provide key data on the permeability and gas saturation properties of the reservoir. The total costs of the Mako South1 Well are estimated at $6.5 million.
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