KrisEnergy obtains approval to farm-out interest in Block A PSC

By Romel S. Gurky

SGX-listed upstream oil and gas firm KrisEnergy Ltd said on Monday it has received approval in April from the Indonesian authorities for the farm-out of a 21.6666 percent working interest in the Block A Aceh PSC in Indonesia?s Aceh Province to the current operator of the block, PT Medco E&P Malaka.

KrisEnergy said in a statement it now holds a 15 percent working interest and Medco has 85 percent working interest in Block A Aceh, and has reduced its future exposure to the gas development capital expenditure.

Block A Aceh covers 1,680 sq km over the North Sumatra Basin, which is located onshore Sumatra and extends offshore into the Andaman Sea. The license contains several gas condensate discoveries, three of which have been approved for development by the Indonesian authorities. An initial gas sales agreement was signed in January 2015.

Following the regulatory approvals, KrisEnergy said it assessed and charged a unaudited non-cash impairment of US$52.3 million for Block A Aceh, which together with a write-off related to the relinquishment of the Kutai PSC, higher operating expenditure and increased finance costs, led to a net loss after tax of $26.1 million in the first half of 2017.

KrisEnergy announced plan to reduce its interest in Block A Aceh PSC in November of last year in line with a revised business plan to reduce exposure to contract areas where the company has a high working interest in order to mitigate risk and reduce future capital expenditure commitments given the continued volatility in oil and gas markets.

Editing by Reiner Simanjuntak