Neon to downsize interest in Tanjung Aru PSC

By Alexander Ginting

ASX-listed oil exploration firm Neon Energy Limited plans to down size its non-operating interest in Tanjung Aru PSC, offshore East Kalimantan, to finance planned drilling campaign in the block.

The company currently has 42 percent interest in the block with operator Kris Energy holding 43 percent and Natuna Ventures Pte Ltd has 15 percent.

The company did not disclose the exact percentage of interest it wanted to farm out.

"Operator KrisEnergy is currently tendering for a 3D seismic vessel to acquire new data within the block early this year, the aim of which is to firm up a drilling location on the block. Once completed, the joint venture will have fulfilled its obligation to the Indonesian Government and will have an option to enter into a second phase, which would require a well to be drilled. Consistent with our strategy the intent is to farm down equity in order to fund that drilling obligation," the company said in a document filed with the ASX on Thursday.

"In addition, the Ruby gas field to the south of our block recently commenced production. This provides an excellent opportunity for early monetization of a Tanjung Aru gas discovery, as the gas pipeline runs adjacent to our block. The economics of gas development in the area are also supported by excellent "frontier" fiscal term, and very strong local gas prices. There are two gas discoveries on the block from 2002, deemed to be non-‐commercial at the time due to the prevailing low gas price. With gas pricing at a much higher level now, these resources may offer potential for development as tiebacks to any new discovery."

Editing by Reiner Simanjuntak