Hexindo to farm-out interest in Lemang PSC to Mandala

By Romel S. Gurky

SGX-listed Ramba Energy Limited said that its indirect Indonesian subsidiary PT Hexindo Gemilang Jaya had on September 16 entered into agreements to farm-out a 15 percent participating interest at Lemang block, in South Sumatra, to Mandala Energy Lemang Pte Ltd, a Singapore registered company.

The company, which through Ramba Energy Lemang Ltd indirectly owns 80.4 percent of Hexindo, said in a statement on Monday that Hexindo has also granted a call option to Mandala to acquire an additional 6 percent participating interest in the Lemang PSC from the company.

Mandala has a right to exercise its call option from the later of the date of completion of the farm-out or one business day after January 1, 2018 and ending on March 31, 2018.

?The purpose of the transaction is to rationalize Hexindo?s funding obligations and reduce its future capital expenditure in respect of the Lemang PSC in the current climate,? Ramba said in the statement. Proceeds from the farm-out and the call option (if exercised by Mandala) will be applied towards funding Hexindo?s remaining participating interest share of the capital expenditure required in relation to the Lemang PSC, it added.

The farm-out remains subject to the approvals from the Indonesian upstream oil and gas authority SKK Migas and the government.

The Lemang Block is located in the northernmost part of the hydro-carbon rich South Sumatra basin, a proven region for oil and gas production with transportation infrastructure already in proximity. The Lemang PSC was initially entered into on January 18, 2007, and this contract granted Hexindo and PT Indelberg Indonesia the right to join and assist Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi in the exploration for, exploitation of and development of the potential resources within the Lemang Block.

Editing by Reiner Simanjuntak