Andalas says it may fail to acquire Bunga Mas PSC

By Romel S. Gurky

British oil and gas company Andalas Energy and Power Plc provided the following update in relation to its proposed acquisition of an interest in the Bunga Mas production sharing contract (PSC) in South Sumatra Province.

Andalas said in a statement on Monday that the long stop date for fulfillment of the conditions precedent to the sale and purchase agreement expired on 15 February, and the parties have not extended it.

The vendor has advised Andalas that the government of Indonesia (GOI) has advised that it intends to issue a letter terminating the PSC during the week commencing Monday. If, as is expected, the GOI issues the termination letter, Andalas will terminate the sale and purchase agreement.

As advised on 12 February 2019, the GOI asked the PSC contractors to deposit sums into an escrow account and lodge performance bonds as a condition of renewal of the PSC. The escrow sum is understood to be approximately US$5.8 million and the contractors have not satisfied this request. The directors have concluded that it would not be in the interests of the company to seek to raise funds sufficient to fulfill these requirements.

As previously announced, to date Andalas has incurred direct costs of an estimated 200,000 of legal, professional and other direct costs in connection with Bunga Mas.

Andalas Energy & Power PLC CEO, Simon Gorringe, said: ?We are disappointed by the recent developments at Bunga Mas. We could not ask shareholders for the funds to lock up US$6 million in addition to the capital required to develop the field. However, Andalas will only terminate the agreement when we know that the license has been terminated by GOI.

"Colter is currently drilling, and we look forward to providing shareholders with further news in the coming weeks both on Colter and the Company's interest in Badger."

Andalas announced on August 29 of last year it had entered into a conditional sale and purchase agreement pursuant to which it had agreed to acquire 100 percent of Aura Violet International Ltd (AVI) from Tilegarre Corporation.

AVI is the parent company of PT Bunga Mas Energi (BME), which has a 25 percent participating interest in the Bunga Mas PSC. The other participating interests in the PSC are held by Bunga Mas International Company (BMIC) as to 51 percent and Dorato Fiore Pacifico Ltd (DFP) as to 24 percent. BMIC is the operator of the PSC. Each of AVI, BMIC and DFP are subsidiaries of Arctic Bay Ventures Inc (ABV).

Editing by Reiner Simanjuntak