Novus sells minor Indonesian assets

Australia's publicly-listed oil and gas firm Novus Petroleum Limited announced Thursday it had sold its non-operated interests in the Malacca Strait and Lematang PSCs, both in Sumatra with net proceeds of US$13.1 million.

Novus' entire 26.03 percent working interest in the Malacca Strait property had been sold to Reliance Universal Ltd, a private company, while its 15 percent interest in Lematang was sold to unidentified company.

Novus said the divestment of these two Indonesian assets, which comprise mature oil production and undeveloped gas discoveries with minimal growth potential, is entirely consistent with the company?s strategy.

?The two low-value Indonesian assets being sold are in stark contrast to the two remaining Indonesian properties, Kakap PSC offshore West Natuna and Brantas PSC in East Java. Both Kakap and Brantas are powerful cash and profit generators and are important to the delivery of the company's strategy. They are worth substantially more than the properties sold, both in absolute terms and in terms of dollars per barrel-equivalent,? said the company in a statement.

Malacca Strait PSC

The Malacca Strait PSC (Production Sharing Contract area) lies principally onshore in central Sumatra and is a mature property, which has produced over 80 percent of its ultimate recoverable reserves since inception in 1984. Remaining proven and probable reserves amount to 48.4 mmboe as of 1 January 2002), of which 12.5 mmboe are net to the working interest being sold. The producing basins have been extensively explored and whilst some gas and gas potential remain, there is no local market for gas.

Novus considers there to be little or no remaining commercial upside in the Malacca Strait property unless the fiscal regime were to be improved.

Novus acquired its original interest in Malacca Strait as part of a package of assets from Oryx at float in 1995. The value then ascribed to Malacca Strait was US$8.4 million. Subsequently, the property has produced US$8.3 million of surplus net cash flow and taking into account the sale proceeds, the property has generated an annualized rate of return of 19 percent over the time Novus has held the asset.

Novus' entire 26.03% working interest in the Malacca Strait property has been sold to Reliance Universal Ltd, a private company. The consideration for the sale comprises a purchase price, including working capital, of US$13.2 million less net cash proceeds of US$1.2 million between the effective date and closing. The effective date for the transaction was 1 January 2002 and financial closing occurred on 17 January 2003.

Lematang PSC

Novus farmed into the Lematang PSC in 1996 and participated in the discovery of the Singa gas field in the following year. Whilst proven and probable reserves attributed to the field amount to 6.2 mmboe as of 1 January 2002, net to the 15 percent working interest being sold, the gas remains undeveloped.

A sale of Novus' 15 percent working interest has been agreed with a third party for a price of US$1.3 million and an effective date of 4 October 2002. However, the sale has been pre-empted by another member of the Joint Venture and financial closing will not occur until after the approval of the Indonesian government authorities.

Novus? other Indonesian properties

Following completion of these sales, Novus' Indonesian portfolio will consist of a 25 percent working interest in the Kakap PSC and a 50 percent working interest in the Brantas PSC.

Kakap and Brantas each have unique features, which set them aside from most other Indonesian properties. Both are principally gas producers, although Kakap continues to produce oil. Kakap sells gas into Singapore at a US dollar price linked to international oil markets. The gas sales are managed under a contract which extends until at least 2028 and whilst Novus perceives limited remaining exploration potential in Kakap, its long and solid future cash stream is important to fund the company's growth elsewhere.

Brantas sells gas into the eastern Javan domestic market, again at a price specified and paid in US dollars. The potential of this prospective block is currently being realised with gross gas sales moving from 4 mmcfd at end 1999 to 11 mmcfd at end 2001 and over 40

mmcfd now. Plans are in place to expand production from existing, demonstrated reserves to 50 mmcfd in 2003. In addition, significant exploration potential remains, perhaps for oil as well as gas.(alex)