Neon Energy signing of Tanjung Aru PSC

(20 December 2011)--Neon Energy Limited (NEN) is pleased to announce the execution of the Tanjung Aru Production Sharing Contract (PSC) by a Joint Venture consortium comprised of the following companies:
Neon Energy Ltd 42%
KrisEnergy Ltd (Operator) 43%
Natuna Ventures Pte Ltd 15%

The PSC was awarded via tender, following an extended Joint Study conducted by the consortium in co-operation with the regulatory authority, MIGAS.

The Tanjung Aru block covers some 4,200 km2 offshore Kalimantan, in water depths ranging from 20 metres to over 1,000 metres. The block is located in a relatively underexplored area of the Kutai Basin, one of Indonesia?s most prolific hydrocarbon provinces with more than 12 Billion barrels of oil equivalent discovered to date. The Joint Venture has already identified multiple petroleum plays in both shallow water and deep water, each with the potential for commercial accumulations of gas/condensate and/or oil. Two gas discoveries are situated within the block, both drilled by Amerada Hess in 2002.

Several leads are evident from the existing 3D seismic volume available within the block, and are likely to contain prospective resources well in excess of the minimum economic field size (MEFS). The MEFS is deemed to be low as a result of the favourable ?frontier? PSC terms, proximity of the block to infrastructure, and increasing domestic gas prices.

The PSC has an initial three-year term, with an associated work commitment of 500km2 of 3D seismic acquisition and processing. The 3D seismic programme will commence during 2012 and will be designed to delineate prospects for drilling in the second three-year term. This optional second term has an associated work commitment of a single exploration well.

Neon Energy Managing Director Ken Charsinsky commented ?This addition to Neon?s diverse portfolio highlights the Company?s disciplined approach to new venture acquisition. We have taken the time necessary to secure material interests in quality assets with work commitments commensurate to the risk/reward profile of the opportunities. We look forward to working with our partners as we mature the first exploration phase of this block, commencing with the 3D seismic survey next year.? (ends)