Nido farms in to three PSCs in Riau Islands

By Puspita Maylana Devi

ASX-listed firm Nido Petroleum Limited said that it has executed three separate Farm-in Agreements with Lundin Petroleum B.V. (Lundin) to participate in the Gurita, Baronang and Cakalang production sharing contracts (PSC) in Penyu and West Natuna basins, offshore Riau Islands province.

Under the terms of the Baronang and Gurita Farm-in Agreements, Nido will earn a 10 percent participating interest in each PSC by paying a disproportionate share of the exploration costs associated with the drilling of the exploration wells in the Baronang and Gurita PSCs and paying 10 percent of past costs for each PSC, the company said in a press statement on Thursday.

In relation to the Cakalang PSC, Nido will earn a 10 percent participating interest through payment of its pro-rated 10 percent share of past costs for this PSC. In addition, Nido will be responsible for its 10 percent share of future costs in the three PSCs.

Nido has the right to increase its participation interest in each of the three PSCs, up to a maximum of 20 percent, prior to the commencement of the drilling campaign, on the same terms.

The exploration wells in the Gurita and Baronang Contract Areas form part of a larger rig-share program being coordinated by Premier Oil on behalf of Lundin. Lundin expects to commence drilling a back-to-back program in the fourth quarter of 2013, subject to finalization of the drilling contract and well sequencing.

The assignments of interest contemplated under the three Farm-in Agreements are subject to the approval of the upstream authority SKK Migas.

Nido?s Managing Director Phil Byrne stated that participation in these three PSCs represents a measured opportunity for Nido shareholders to participate in a near-term exploration drilling programs in prospective basins with proven petroleum systems.

?The Indonesian work program, as well as the previously announced Baragatan well in the Philippines, wilt be funded from Nido?s cash reserves and forecast production revenue from the Galoc Field. Lundin has demonstrated that it has a highly competent and successful team and Nido looks forward to working closely with Lundin in the exploration of this attractive portfolio,? Byrne said.

Editing by Benget Besalicto Tnb