Pan Orient anticipates drilling in Batu Gajah PSC mid 2015

By Romel S. Gurky

Canadian oil and gas firm Pan Orient Energy Corp said based on the recently acquired 3D seismic data, it expected to start drilling in three locations within the Batu Gajah production sharing contract (PSC) on shore Sumatra in the middle of next year.

The company said in a statement obtained Friday that approximately 120 square kilometers of 3D seismic data covering a large portion of the Akatara-Selong oil and gas discovery area made by another operator, Ramba Energy, directly adjacent to Pan Orient?s acreage at the Batu Gajah PSC has been purchased recently after being only recently made available by the Indonesian Government technical data administrator.

The preliminary results of the interpretation of this high quality 3D seismic data continues to indicate the company's view that the Selong oil discovery extends into Pan Orient's adjacent Batu Gajah PSC acreage, it added.

?On the basis of this newly available seismic data, the company has selected three drilling locations for which Forestry Ministry approval will be sought. It is estimated this approval process will take approximately four months and could be followed by drilling in mid-2015,? Pan Orient said.

The company said in April that the drilling of the well in the Batu Gajah PSC will also depend on the successful farm-out process of its interest in the block.

Regarding this, Pan Orient said it has made significant progress in the farm-out process of the Batu Gajah PSC.

?The company is currently in negotiations on a non-exclusive basis regarding the potential farm-out of an up to 40% working interest in the Batu Gajah PSC,? said the company, which holds a 77 percent interest in the PSC.

Elsewhere, Pan Orient said it has also made significant progress in the farm-out process of up to 50 percent interest in the East Jabung PSC onshore Jambi.

?The company has accepted a non-binding proposal and is currently facilitating legal and financial due diligence on an exclusive basis while working towards binding farm-in and joint operating agreements. These agreements, if concluded successfully, are anticipated to be completed in September,? said Pan Orient, which holds 100 percent interest in East Jabung PSC.

Pan Orient said capital expenditures in Indonesia were US$5.0 million during the first half of 2014, with $4.3 million in the first quarter and $0.7 million in the second quarter. On a year to date basis, there have been capital expenditures of $4.5 million at the East Jabung PSC related primarily to completing the 440 kilometer 2D seismic program, $0.4 million at the Batu Gajah PSC related to capitalized general and administrative expenses, and $0.1 million for equipment inventory.

Editing by Reiner Simanjuntak