AEM interest aquisition in Wailawi project being finalized
Monday, February 27 2012 - 05:07 AM WIB
Australia-listed Artist & Entertainment Group Limited (AEM) announced that it was seeking to take up an interest in the Wailawi Oil and Gas project in East Kalimantan by taking an assignment of rights from Union Pacific Trading Pty Ltd (UPT).
AEM has been advised by UPT that the acquisition of rights in respect of the Wailawi project is being finalized.
UPT?s wholly-owned Indonesian subsidiary, is now proposing to enter into an agreement with a local government owned company Perusda Benuo Taka and upstream authority BPMIGAS.
Perusda Benuo Taka is owned by East Kalimantan Panajam Paser Utara Regency government.
Pursuant to this proposed agreement, UPT?s subsidiary will be entitled to receive a share of the net project earnings generated from the Wailawi Project on the condition that it meets its litigations under a Production Sharing Contract (PSC) with Perusda and BPMIGAS, including undertaking further exploration activity in the Wailawi project area.
The Wailawi Project, located at Balikpapan East Kalimantan, was discovered in 1975 and brought into production in 1979 and was a significant gas producer from only four wells with peak production reaching 18 million cubic feet of gas per day in 1985. Two more wells were drilled in 1986 with production continuing until 1999.
Following the Asian financial crisis of the late 1990s, gas and oil prices went down to extremely low levels (e.g. gas was at US$3 per 1,000 cubic feet and oil was at US$20 per barrel). This resulted in the field being placed on ?care and maintenance?.
In October 2005, Perusda entered a Production Service Agreement with BPMIGAS. This resulted in the field being put back into production.
AEM has now been advised by UPT that negotiations regarding finalisation of the terms of the proposed PSC are at an advanced stage.
?It is anticipated that the new PSC will have a term of 15 years. On submission of the agreed form PSC to the Indonesian Minister of Minerals and Energy, we anticipate that the PSC will be executed within 10 working days, at the discretion of the Minister,? AEM said.
Following final execution of the PSC by the Minister of Minerals and Energy, UPT has agreed to assign its rights in the Wailawi Project to AEM. A further announcement will then be made by AEM and a new timetable furnished regarding obtaining shareholder approval of the acquisition ot an interest in the Wailawi Project from UPT.
Editing by Roffie Kurniawan