Fulucai signs new MoU to acquire Langsa TAC

By Romel S. Gurky

After canceling an earlier MoU made with Blue Sky Langsa Ltd (BSL), Calgary-based Fulucai Productions Ltd announced Wednesday it has entered into a new MoU with the same company to acquire a 15 percent working interest in certain oil and gas interests offshore North Sumatra.

Fulucai said in a statement that the asset, known as Langsa Offshore Technical Assistance Contract (TAC), is a 77 square kilometer offshore concession in 325 feet of water depth, 55 kilometers from the shoreline. The block has 2 discovered fields and 7 wells with historic sunk costs of approximately US$61.2 million. Mobil Oil initially made the discovery in 1980.

?The company and BSL intend to enter into a formal Participation Agreement in accordance with normal industry standard practice, requisite regulatory requirements and approvals in the U.S., Canada and Indonesia,? Fulucai said in the statement.

Under the terms of the agreement, the company will acquire a 15 percent working interest in the Langsa TAC for US$918,568 consisting of cash at closing and payment for 15 percent of the direct costs for the 2014 work program (WP2014) which are currently estimated to be approximately $8.877 million. Fulucai's 15 percent interest of the direct costs will be approximately $1,331,550. The effective date for the transaction is January 1, 2014.

This is a related party transaction. The controlling shareholder of Fulucai is the President of Blue Sky Langsa, the statement said.

Fulucai first signed an MoU with BSL in late 2013 to acquire stake in the Langsa TAC, but the company announced in February 2014 it had canceled the MoU as it sought to acquire oil and gas properties in the US.

Editing by Reiner Simanjuntak