Premier?s production up 5 percent in Indonesia

By Romel S. Gurky

LSE-listed Premier Oil Plc announced on Thursday its net production from Indonesia in 2014 on a working interest basis was 14,400 boepd, up 5 percent from 13,500 boepd in the previous year.

This was driven by a strong operational performance from the Anoa field on the Premier-operated Natuna Sea Block A, our key asset in Indonesia. The Anoa field delivered 141 billion British thermal units per day (BBtud) during 2014, capturing 44.6 per cent (2013: 39.9 percent) of GSA1 deliveries into Singapore, against a contractual share of 39.4 percent. Natuna Sea Block A?s contractual share for 2015 has been increased to 39.9 percent. Gross liquids production from the Anoa field averaged 1,500 bopd (2013: 1,700 bopd).

Sales from the Gajah Baru field to Singapore under GSA2 averaged 79 BBtud (2013: 82 BBtud). In addition, gas sales of up to 40 BBtud from the Gajah Baru field to the Indonesian market commenced under a Domestic Swap Agreement (DSA) in July. Gas delivered under the DSA replaces gas previously contracted to Batam Island, Indonesia, from the Natuna Sea Block A under GSA3 and GSA4. DSA deliveries are expected to continue until the domestic pipelines are constructed and the GSA3 and GSA4 contracts commence.

In total, 242 BBtud (gross) (2013: 208 BBtud) was sold from Natuna Sea Block A during 2014 with record peak production rates of 391 BBtud achieved. High deliverability from Premier?s Anoa and Gajah Baru fields gives Premier the flexibility to meet peak customer demand and to capitalize upon other suppliers? maintenance and unplanned downtime. Looking to 2015, Premier plans to continue to optimize its production from Natuna Sea Block A and to renegotiate supplier contracts to take advantage of the expected price reductions in oil field services in order to maintain its competitive low operating cost base.

Good progress was made during 2014 on our new Natuna Sea Block A developments, Naga and Pelikan. Following the successful completion of the offshore installation in 2013, hook up and commissioning of the Pelikan and Naga well head platforms was completed in April 2014. The Hakuryu rig commenced development drilling at the Naga field in July with first gas achieved on budget in November. The three development wells at the Pelikan field were completed in early 2015 and the field is expected on-stream at the end of the first quarter.

Natuna Sea Block A?s deliverability continues to exceed its contractual commitments. As a result, Premier is well placed to increase its market share should its partners not meet their contractual commitments under GSA1 as well as to increase its supply of gas into Singapore should demand strengthen.

Elsewhere on Natuna Sea Block A, it is anticipated that the 2012 Anoa Deep gas discovery well will be tied into the Anoa production facilities in 2015 to support GSA1 deliveries. Premier is also progressing FEED for the Bison and Iguana projects as single well subsea tie-backs to Pelikan while concept select for the Gajah Puteri field is underway.

Premier successfully divested its 41.67 per cent non-operated interest in Block A Aceh onshore Indonesia for US$40 million in 2014. Government approvals for the sale were received at the end of 2014 with completion achieved in January 2015.

Premier drilled three exploration wells in Indonesia during 2014: the Kuda Laut-1 and Singa Laut-1 wells on the Premier-operated Tuna Block and the Ratu Gajah-1 well on the Premier operated Natuna Sea Block A.

The Kuda Laut-1 well, which targeted Miocene sands within a four-way dip closed structure, and the Singa Laut-1 side track, which targeted the Oligocene sequence in the adjoining threeway dip closure, discovered in excess of 100 mmboe. Gas gradients have been measured and liquids-rich gas samples were recovered suggesting that the discovery has a high natural liquid content. Planning for a 2016 appraisal campaign is now under way. Premier has 65 per cent equity in the block and will assess the appropriate working interest level to hold as appraisal advances.

Premier also drilled the Ratu Gajah-1 well on Natuna Sea Block A during 2014. While the well flowed gas to surface during testing, less sandstone reservoir than expected was encountered and the discovery is sub-commercial. The results of this well, however, have been integrated into the group?s broader understanding of the Lama play and thicker sands have been identified at the basin margin. The next well in our portfolio to test the Lama play will be the appraisal of the Anoa Deep discovery, which is scheduled for the second quarter of 2015.

Editing by Johannes Simbolon