Pan Orient updates Indonesia operations
Friday, November 15 2013 - 01:08 AM WIB
Citarum PSC onshore Java (Pan Orient operator and 97% ownership)
Capital expenditures of $15.2 million in the first nine months of 2013 were associated with the continued drilling operations at the Jatayu-1 and Cataka-1A wells.
Exploration drilling to date at the Citarum PSC has been very technically challenging and has not led to commercial discoveries. Pan Orient announced in July that the Company was initiating a farm-out process to seek a partner for continued exploration of the Citarum PSC and the farm-out process has commenced. The Citarum PSC has significant prospectivity for commercial quantities of crude oil and natural gas, including the defined Cataka and Jatayu prospects, within a region of existing infrastructure and a large deficit of natural gas supply relative to demand, good fiscal terms and an attractive large cost recovery pool.
Pan Orient's decision to discontinue drilling at the Citarum PSC and to initiate a farm-out process for continued exploration of the Citarum PSC and the future value of the Citarum PSC is dependent on the success of exploration drilling operations through the intended farm-out arrangement. As such, the Company reduced the carrying value of the Citarum PSC exploration and evaluation assets to zero in the second quarter of 2013 and recorded an impairment charge of $86.3 million and recorded a further $4.6 million impairment charge in the third quarter of 2013 primarily relating to costs incurred to complete drilling operations of the Cataka-1A well in July.
Batu Gajah PSC onshore Sumatra (Pan Orient operator and 77% ownership)
On January 16, 2013 an additional 1,730 square kilometers (gross) of exploration lands were relinquished at the Batu Gajah PSC, to hold 793 square kilometers (gross).
Capital expenditures in the first nine months of 2013 of $26.6 with $4.7 million for drilling of the Shinta-1 exploration well, $4.5 million for the Buana-1 appraisal well, $16.3 million for the 400 square kilometer 3D seismic program which was completed in the third quarter and other capital expenditures of $1.1 million.
With respect to the 400 square kilometers 3D seismic program, field acquisition has been completed over the Raka, Takar, Rafa and western prospect areas, and the 3D data is being processed and mapped.
The operator of the Lemang PSC (directly adjacent to and west of a retained portion of Pan Orient's Batu Gajah PSC), has announced that significant hydrocarbons have been encountered in two wells located close to the Lemang PSC / Batu Gajah PSC boundary. Mapping of 2D seismic data over these wells combined with 2D seismic acquired by Pan Orient in 2010 indicates a portion of this structural closure extends into the Batu Gajah PSC. Articles of the PSC contract indicate that unitization of the potential field will be mandatory in the event of a "shared" field. Pan Orient is currently evaluating the field and the potential for drilling a well in our portion of the field.
South CPP PSC onshore Sumatra (Pan Orient operator and 77% ownership).
Capital expenditures were $4.5 million in the first nine months of 2013 with $4.2 million for the 227 kilometer 2D seismic program which was completed in May 2013 and $0.3 million for capitalized general and administrative expenses and other capital expenditures.
After the evaluation of the seismic program results, the Company decided in the second quarter of 2013 to relinquish the South CPP PSC. As part of the relinquishment, it is expected that the Company is required to pay the Government of Indonesia for unfulfilled firm commitments in the amount of $2.8 million, and this amount has been accrued for in the financial statements. As a result of the intended relinquishment the Company is reducing the carrying value of the South CPP PSC exploration and evaluation assets to zero and the Company recorded an impairment charge of $13.3 million for the exploration and evaluation assets of the South CPP PSC as at June 30, 2013.
East Jabung PSC on-shore and offshore Sumatra (Pan Orient operator and 100% ownership)
Capital expenditures of $2.0 million in the first nine months of 2013 related primarily to the initial costs of the 430 kilometer 2D seismic program which is expected to be completed in early 2014.
Subsequent to September 30, 2013, the Company submitted an application to the GOI to voluntarily relinquish approximately 3,242.72 square kilometers of the PSC's offshore area. The result of the relinquishment does not impact the PSC's onshore exploration activities.
As at September 30, 2013 estimated commitments for Indonesia PSC's to October 2015 were $14.0 million for the Batu Gajah, Citarum and East Jabung PSC's.
Capital expenditures
Capital expenditures in Indonesia of $13.2 million in the third quarter of 2013 were $4.0 million for completion of drilling of the Cataka-1A well at the Citarum PSC, $8.4 million at the Batu Gajah PSC associated with the 3D seismic program, and $0.8 million at the East Jabung PSC for the 3D seismic program.
During the first nine months of 2013 capital expenditures in Indonesia have been $48.3 million with $15.2 million at the Citarum PSC, $26.6 million at the Batu Gajah PSC, $4.5 million at the South CPP PSC and $2.0 million at the East Jabung. For the first nine months of 2013, capital expenditures were $22.9 million for exploration drilling, $21.7 million for seismic programs, $2.9 million for capitalized general and administrative expenses, and $0.8 for other exploration expenses.
Outlook
Pan Orient possesses a diverse portfolio of high quality, high impact exploration and production opportunities in Indonesia and is currently seeking to farm-out a portion of the Company's interests in the Batu Gajah, East Jabung and Citarum PSC's. Initial response has been strong from a wide range of companies, necessitating the opening of a second data room. It is expected that farmout activities will extend into early 2014 and be followed by the drilling of up to seven wells in mid-2014, subject to a number of variables.
Data processing of the 400 square kilometer Batu Gajah PSC 3D seismic survey is currently underway and 2D seismic acquisition continues in East Jabung PSC with completion expected in the first quarter of 2014. (end of excerpt)