Quest Petroleum: Completion of Ranau PSC application process
Friday, July 22 2011 - 02:19 AM WIB
Merric is currently finalizing the application process for a production sharing contract (PSC) to be issued on the Ranau block, and under the application process Merric is required to put a US$1m bank guarantee in place.
Following the recent signing of formal agreements for the acquisition of Merric, the Board of Quest has agreed to provide the US$1m bank guarantee to effect the formal PSC application process on the Ranau block on behalf of Merric on the basis the guarantee is secured, is immediately extinguished if the PSC application is not successful and expires in a maximum of 6 months.
In late 2010 Quest provided a similar US$1m bank guarantee facility on behalf of Merric to MIGAS for the completion of the Joint Study work programs to be undertaken at Ranau. Following completion of the Ranauwork programs and formal study reports in Q1 2011, the bank guarantee was released to Quest in full.
Quest to Acquire 100% of Merric
Merric has spent the past 3 years developing a highly experienced oil and gas management team, led by Mr Saxon Palmer, to focus on developing large onshore oil and gas exploration projects in Indonesia and specifically South Sumatra.
Quest currently owns 25% of Merric and will acquire the remaining 75% of Merric in a 100% scrip transaction as detailed in the announcement on 9 June 2011 and the Notice of Meeting lodged 5 July 2011. The Quest general meeting seeking shareholder approval for the proposed acquisition of Merric and an 80% interest in the Ranau gas prospect will be held on 8 August 2011.
Completion of the acquisition of Merric by Quest is subject to all other Merric shareholders agreeing to sell their Merric securities to Quest under individual share purchase agreements, Quest obtaining shareholder approval of the transaction at the meeting on 8 August 2011 and the grant of the Ranau block PSC by BPMIGAS.
Ranau Project Area, South Sumatra
Merric, through its 80% held subsidiary PrabuEnergy Pty Ltd, was awarded a Joint Study area covering approximately 2,123km2 in onshore South Sumatra. The Ranau Joint Study was awarded to PrabuEnergy on 15 September 2010 and was conducted by PrabuEnergy in conjunction with the Directorate General, Oil and Gas and the geological department of a University in Jakarta. The Joint Study process in Indonesia allows PrabuEnergy an exclusive period to complete a technical study over the Ranau area.
PrabuEnergy have completed the study work programs and are currently in the process of applying for a Production Sharing Contract (PSC) over the area. PrabuEnergy significantly will hold the exclusive access to all the data and interpretation acquired on the Ranau area through the Joint Study.
The Ranau area has only limited drilling data to date. However, it is located in close proximity to producing areas of the South Sumatra Basin and is thought to contain similar hydrocarbon structures. PrabuEnergy has developed regional models for the existence of these plays in the Joint Study area and has tested these models with a work program comprising acquisition of closely spaced gravity data and field work.
Completion of Ranau Joint Study Work Programs
PrabuEnergy completed the Joint Study work programs during the March 2011 quarter, with the acquisition of the field gravity data completed in mid-January well ahead of the work program schedule. The data has undergone processing and interpretation, requiring integration with existing seismic and field data as part of the Study reporting process.
The final Joint Study reports were submitted to the Director General, Oil and Gas in March, and form the basis for PrabuEnergy making an application for a PSC over the Ranau project area. (end of edited release)