Pan Orient seeks for extension of Batu Gajah PSC exploration

By Romel S. Grky

TSX-listed Pan Orient Energy Corp plans to apply for a two-year extension of exploration phase in the Batu Gajah PSC, onshore Sumatra, as the company prepares for additional appraisal well of the Akeh discovery.

The company said in a statement Tuesday that the Batu Gajah PSC, Onshore Sumatra 10 year exploration phase expires in January of 2017 and the company intends to submit an application for a two year extension in June 2016, the earliest date for an application allowed under oil and gas regulations. ?The two year extension would allow the time required to finish drilling Akeh-2, seek conclusive discovery status and submit a completed Plan of Development,? it said.

Following successful drillings at the Akeh-1 well in Batu Gajah PSC last year, the company has engaged in talks with the government of Indonesia to have the Akeh structure ?released from exploration status.?

The company, however, said in the Tuesday statement that at a recent meeting with the Government of Indonesia (GOI) and oil and gas regulator, the company was informed that the GOI wanted to see one additional appraisal well of the Akeh discovery prior to considering "conclusive discovery" status. ?Long lead time preparations are currently underway towards the drilling of a deviated appraisal well, Akeh-2, from the existing Akeh-1 well pad,? Pan Orient said

?In parallel to these Akeh-2 pre-drill tasks, the company has been involved in discussions with a number of parties since December 2015 seeking a partner in the Batu Gajah PSC,? it added.

Pan Orient holds a 77 percent interest in Batu Gajah PSC as the operator.

Meanwhile, At a March 17, 2016 East Jabung PSC partners meeting Pan Orient was informed that significant progress has been made towards a road access agreement to the first proposed exploration drilling location on the first East Jabung PSC, Onshore Sumatra.

Successful conclusion of this agreement will result in a substantially reduced length of new build road, from the originally proposed 24 kilometers, to approximately three kilometers. This would result in a substantially reduced well cost estimate, making it likely that the first East Jabung exploration well will be drilled within the US$10 million limit for Pan Orient's carried interest.

Further, Pan Orient, which holds a 49 percent interest in the East Jabung PSC, was informed by the operator that road and well pad construction is currently planned to commence in the late third quarter of 2016, followed by drilling in the fourth quarter of 2016.

?Pan Orient is pleased with the progress that the operator has made to date towards the shorter and less costly well location access route and even more encouraged by the additional technical work that the operator has completed on the first East Jabung drilling prospect that was focused on assessing various technical risks and the overall chance of success. Pan Orient is very encouraged by the prospective resource volumes that were estimated for the first prospect as part of the operator's additional in-house technical work,? the statement ended.

Editing by Reiner Simanjuntak