Medco signs deal to sell S. Sumatra CBM gas

Canadian firm CBM Asia Development Corp. announced Tuesday that Medco Energi as the block operator has signed a non-binding MoU, to conduct the sale and purchase of coal bed methane (CBM) gas produced during the dewatering stage at the Sekayu CBM PSC, South Sumatra.

Alan Charuk, Chief Executive Officer and President, commented, ?This MOU will facilitate the early sale of coalbed gas from the Sekayu PSC, where CBM Asia earlier this month announced its NI 51-101 compliant Best Estimate of 1.062 trillion cubic feet of unrisked, recoverable gross prospective gas resources. We are currently assisting Medco?s engineering staff to design the pilot production program, expected to be initiated during the first quarter of 2012.?

Under the terms of the MOU, the Sekayu CBM PSC has been approved by upstream oil and gas regulator, BPMigas, to sell CBM produced during the dewatering stage for local power generation. The parties involved are working to define terms of a Gas Sales and Purchase Agreement (GSPA) that would provide the basis for gas sales and deliveries which are expected to commence during 2012.

Medco Energi has 50 percent interest in the block with CBM Asia has the right to earn an estimated 12% participating interest. (romel)