Premier sells off Indonesian stake

Singapore’s KrisEnergy has agreed to take over Premier Oil’s stake in the Block A Aceh production sharing contract in Indonesia.

KrisEnergy revealed on Tuesday it would take Premier’s 41.6666% stake in the block in exchange for a total after-tax consideration of $40 million.

It added it would settle the payment through a combination of cash proceeds and repayment of Premier intercompany debt.

The disposal of its interest in Block A Aceh comes just a day after Premier revealed it had reached an agreement to sell off its non-operated assets in the UK North Sea to Hungary’s MOL Group in a $130 million deal as it looks to focus on its operated Solan and Catcher developments.

“We are continuing to deliver on our plans to dispose of $300 million of non-core assets this year, focusing our capital and people on the higher return projects in our portfolio," Premier chief executive Tony Durrant said.

Block A Aceh covers an area of 1867 square kilometres onshore Sumatra and contains several gas condensate discoveries, including the Alur Rambong, Alur Siwah and Julu Rayeu fields, which were approved for development in 2007.

It also contains the Matang gas discovery which needs further appraisal prior to being developed and the high carbon dioxide Kuala Langsa gas discovery.

KrisEnergy’s share of best estimate contingent resources from the development pending category associated with the Alur Rambong, Alur Siwah and Julu Rayeu fields totals 29.2 million barrels of oil equivalent, as of 31 December 2013.

The PSC also contains working interest best estimate contingent resources in the development unclarified category of 74.4 million boe, with Kuala Langsa accounting for 87.6% of that figure.

“This is a significant transaction for KrisEnergy given the size of the resource base,” KrisEnergy director of business development, Richard Lorentz, said.

“This will be a substantial gas project that complements our gas commercialisation plans offshore East Java and Kalimantan, and adds to building our position in Sumatra, where we are the operator of the offshore East Seruway exploration PSC.”

The current development plan for the PSC anticipates weet gas from the Alur Rambong field being produced in 2017, followed by sour gas from the Alur Siwah field.

Once the Alur Siwah filed declines from plateau, the plan is to then bring the Matang field on stream.

The current development plan will see the construction of a gas plant for carbon dioxide and hydrogen sulphide removal, along with the drilling of up to 18 new wells and re-entry and completion of existing wells.

Block A Aceh is operated by PT Medco E&P Malaka with a 41.6667% interest and Japan Petroleum Exploration (Japex) holds the remaining 16.6667% interest.

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