Pan Orient acquires W. Java exploration block

Calgary-based oil, gas firm Pan Orient Energy Corp. announced on Thursday it has purchased an operated 69% working interest in the 4,440 square kilometer Citarum Production Sharing Contract (PSC) onshore West Java.

The company said it paid US$7 million in cash and $4 million in Pan Orient common stock to Malaysian firm Ranhill Berhad, which retains a 11% carried working interest through to first commercial oil or gas production.

This transaction follows the acquisition of a 90% working interest in both the Batu Gajah PSC, south Sumatra, and the Pemai Taluk Joint Study Agreement in May 2008.

The Citarum PSC, which was awarded to Ranhill Berhad in July 2005, lies approximately 25 kilometers south of Jakarta. Seismic data coverage is sparse with approximately 500 kms of 2D data covering approximately 10% of the PSC area. Only one well has been drilled to date within the concession boundary, encountering a 590 meter thick Batu Raja limestone reef with cavernous porosity zones that resulted in the loss of over 120,000 bbls of drilling fluid. The well has been cased and suspended with the main Batu Raja objective untested within structural closure, across the cavernous porosity zone.

Remaining commitments over the first exploration period include 3 wells and 750 kilometers of 2D seismic, totalling approximately $22.75 million.

Contracts have already been awarded for a 500 km 2D seismic program over the Batu Gajah PSC and a 750 to 800 km 2D survey over the Citarum PSC. Permitting is underway and crew mobilisation for both seismic surveys is anticipated in the September/October 2008 time period. Multi-well drilling programs are anticipated to commence in 2009, the exact timing being subject to partner and Government of Indonesia approval, it said.

The company also said it had just signed the Kubu Joint Study Agreement (JSA) in Central Sumatra. Under the JSA, the company will have first right to acquire the exploration block from the government of Indonesia.(alex)