CityView considering to sell Indonesian assets
Thursday, March 31 2005 - 02:37 AM WIB
“I recommend that CityView cut its losses on its two gas concessions in Indonesia,” Chairman A. I. Saddique said in company’s 2004 annual report released Wednesday, arguing that CityView would not be prudent to throw good money after bad in the drilling of further gas wells.
Saddique said despite prospective pre-drilling analysis by Gaffney Cline & Associates, the post-drilling results of Sebaya 2 (of the Madura JOB) proved a total disappointment.
“The well proved non-commercial. In fact, the result of Sebaya 2 was much less favourable than those gleaned from Sebaya 1. Gas resources on Madura, if any, remain somewhat elusive,” Saddique said.
According to Saddique, another exploratory well requires to be drilled on Madura. It will cost about US$3.0 million. “A small Perth-based entity like CityView cannot hope to continue to finance further drilling operations,” Saddique added.
“Four wells have already been drilled on Madura. We do not have any income stream to finance further drillings,” Saddique said.
Furthermore, two more wells must be drilled this year on the Simenggaris block at a total cost of about US$8.0 million, Saddique said, citing that this gas asset is a marginal one primarily dependent on the back of immediate off-take arrangements.
“I will try, in the course of this year (2005) to ensure that CityView is not required to make further financial contributions to the drilling and in this connection to dispose of such part of CityView’s interests in the two gas concessions on the best commercial terms possible,” Saddique added.
CityView owns a 20 percent of Medco Madura Pty Ltd, the holder of the Madura block, and a 25 percent of Medco Simenggaris Pty Ltd, which holds the Simenggaris block. (Robert)