Interra, Citigroup to acquire Mitsubishi's interests in ONWJ & SES PSCs

Singapore-listed oil company Interra Resources Limited and Citigroup Financial Products Inc have agreed to form a 50-50 joint venture (SPV) to acquire Mitsubishi Corporation?s 5 percent interest each in the Offshore Northwest Java (ONWJ) PSC and the South East Sumatra (SES) PSC.

Interra said in a statement on Wednesday that the SPV will pay US$ 48 million for the acquisition, which represents a non-operating interest in two substantial PSCs with net attributable production of approximately 5,600 bpd (barrels per day) of oil and 13 mmcfd (million cubic feet per day) of gas. For the year 2003, the revenue for both PSCs was US$ 42.9 million.

BP operated ONWJ PSC contains some 52 oil and gas fields. The acquisition?s share of production is approximately 1,600 bpd of oil and 13 mmcfd of gas. The largest development initiative underway is the further commercialization of the PSC?s vast gas reserves.

Meanwhile, China National Offshore Oil Company (CNOOC) operated SES PSC contains over 280 exploration wells that have been drilled, resulting in the discovery of 47 fields, of which 33 fields have been developed. The target?s share of gross oil production is approximately 4,000 bpd.

ONWJ has two gas sales agreements in place to supply up to 260 mmcfd PT Perusahaan Umum Listrik Negara (PLN) and Perusahaan Gas Negara (PGN). Meanwhile, SES has considerable volumes of undeveloped gas, and a gas sales agreement which was signed on 12 December 2004 with PLN is expected to lead to the eventual export of 80 billion British thermal units per day of gas beginning in 2006.

Interra added that SPV would be funded through a mixture of equity and shareholders? loans from both Interra and Citigroup as well as senior debt financing provided by Citigroup.

?Macquarie Securities (Asia) Pte Ltd acted as financial advisor and arranger of finance to Interra on the acquisition,? Interra said.

?This represents an excellent opportunity for Interra to acquire material producing assets that provide significant proven reserves and identified development plans to increase production. It also allows the Interra to diversify into the natural gas market. These fields are operated by multinational organizations with successful track records for value creation and who are also committed to Indonesia,? CEO of Interra Sugiharto Soeleman commented in the statement. (Robert)