AWE finalizing new reservoir models in AAL oil project

By Romel S. Gurky

ASX-listed AWE Ltd said on Friday that field development optimization studies are ongoing to incorporate results from the AAL-4XST1 appraisal well in its Ande Ande Lumut (AAL) oil project, in the Northwest Natuna PSC in the Natuna Sea, with a focus on assessing G sand resources.

The company said in a statement that laboratory work has been completed, confirming that comingled production of K sand and G sand oil is possible with no significant changes to the FPSO processing infrastructure.

The joint venture is now finalizing new reservoir models to support an application to jointly develop the G sand and K sand reservoirs from field startup. This may require an amendment to the approved K sand plan of development (POD) and will result in final investment decision (FID) being moved into the second half of calendar year 2018. Stage 2 commercial tenders remain on hold until this work is completed, the company said.

?On AAL, work continued on integrating the G sand into the existing field development plan and this will result in FID being moved into the second half of CY 2018,? AWE said in the statement.

In recent weeks, the oil price has reverted to a sub-$50/bbl range and AWE is working closely with the operator to quantify what effects any changes to the POD, a lower oil price and revised FID schedule will have on reserves, capital requirements and project economics.

Elsewhere, the company said that the sale of AWE?s 42.5 percent interest in the Bulu PSC, including the Lengo gas project, to a subsidiary of HyOil Pte Ltd for up to US$27.5 million has been approved by the Indonesian government and is expected to complete in the first quarter of 2018. Completion will trigger a payment of approximately $15 million to AWE with the potential for additional cash payments following the execution of gas sales agreements.

Editing by Reiner Simanjuntak