Pan Orient updates Indonesia operations
Tuesday, April 15 2014 - 12:51 AM WIB
Citarum PSC onshore Java (Pan Orient operator and 97% ownership)
Capital expenditures of $16.6 million in 2013 were associated with the drilling operations at the Jatayu-1 and Cataka-1A wells that continued on from the fourth quarter of 2012 and capitalized general and administrative expenses for the first half of 2013.
Exploration drilling to date at the Citarum PSC has been very technically challenging and has not led to commercial discoveries. Pan Orient is conducting a farm-out process to seek a partner for continued exploration of the Citarum PSC.
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 results in the future value of the Citarum PSC being 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 and recorded an impairment charge of $92.6 million.
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 2013 of $27.4 million with $4.7 million for drilling of the Shinta-1 exploration well, $4.5 million for the Buana-1 appraisal well, $16.6 million for the 400 square kilometer 3D seismic program which was completed in the third quarter and other capital expenditures of $1.6 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 in discussions on this matter with the Indonesian oil and gas regulator and working towards the drilling of a well in the area in 2014, subject to both the timing of forestry approval and successfully farming-out a 40% interest.
South CPP PSC onshore Sumatra (Pan Orient operator and 77% ownership).
Capital expenditures were $4.5 million in 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 $2.7 million, and this amount has been accrued for in the financial statements. As a result of the intended relinquishment the Company reduced the carrying value of the South CPP PSC exploration and evaluation assets to zero and the Company recorded an impairment charge of $13.7 million for the exploration and evaluation assets of the South CPP PSC in 2013.
East Jabung PSC on-shore and offshore Sumatra (Pan Orient operator and 100% ownership)
Capital expenditures of $4.5 million in 2013 related primarily to the 440 kilometer 2D seismic program which is expected to be completed by the end of April, with processing and interpretation of this data to be completed by July.
In the fourth quarter of 2013, the Company submitted an application to the Government of Indonesia to voluntarily relinquish approximately 3,243 square kilometers of the PSC's offshore area. The result of the relinquishment does not impact the PSC's onshore exploration activities.
OUTLOOK
Much of the progress made regarding the exploration potential that was defined in Indonesia in the latter part of 2013 and early 2014 based on newly acquired 2D and 3D seismic data was overshadowed by drilling results earlier in 2013 at the Citarum PSC where a very difficult, structurally complex drilling environment resulted in the failure to reach the deeper primary objectives on two prospects. This disappointing and expensive outcome resulted in the decision by the Board of Pan Orient to reduce the company's financial exposure to Indonesia by seeking partners for each of the three remaining Company operated contract areas, despite the high remaining exploration potential of the Indonesian assets.
The Company has now received and is currently evaluating farm-in proposals for the East Jabung PSC, and continues discussions witlateh a number of parties that expressed interest late in the farm-out process and were unable to meet the March 31, 2014 request for proposals for the Batu Gajah and Citarum PSCs. The Company anticipates a near term announcement to be made with regard to a new East Jabung partner and the Company continues to progress discussions with potential future partners for the Batu Gajah and Citarum PSCs.
Batu Gajah PSC
Pan Orient is currently in discussions with the Indonesian oil and gas regulator relating to unitization of the potential new field in the adjacent Lemang PSC, and is working towards the drilling of a well in the area in 2014, subject to both the timing of forestry approval and successfully farming-out a 40% interest.
The timing of an up to three well exploration program at Batu Gajah targeting Takar, Raka and Akatara East prospects will be directly dependent upon the timing of the farm-out of a 40% interest.
- Takar Prospect: a 46 square kilometer in maximum areal extent closure surrounding the Manismata-1 gas discovery made in 1988 by a major international oil and gas company.
- Raka Prospect: a large 36 square km structure in maximum areal extent closure comprising a possible oil leg down dip of another 1980's gas discovery made by a major international oil and gas company at Tiung.
- Akatara East Prospect: directly offsets the Akatara / Selong oil and gas discovery which was made in 2012/2013 by a competitor in an adjacent PSC and in which one of the wells which tested oil and gas was drilled approximately 150 meters from the concession boundary within a structural closure that is interpreted to extend into the Pan Orient operated Batu Gajah PSC based on 2D seismic data. Discussions have taken place and continue with the Indonesian oil and gas regulator regarding a data trade including wells and additional seismic towards a possible unitization of the portion of the Akatara discovery.
East Jabung PSC
The timing of a one well program at East Jabung targeting the Anggun prospect will be directly dependent upon the timing of the farm-out of a 50% interest.
Anggun prospect: a 228 km 2D seismic survey acquired in 2013, infilling existing older vintage 2D seismic data, has confirmed an approximately 85 to 100 square km maximum structural closure at three primary target levels.
The last portion of an approximately 440 km 2D seismic program in East Jabung PSC is anticipated to be completed within the next 2 weeks over the North prospect with processing and interpretation of this data to be completed by July 2014.
Citarum PSC
The timing of a two well drilling program at Citarum PSC targeting the re-drilling of the Cataka and Jatayu prospects will be dependent on the timing to farm-out a 50% working interest. (end of excerpt)