Release: Ranhill: Successful award of Batu Gajah PSC
Saturday, December 16 2006 - 12:17 AM WIB
RJIH is a joint venture company ("Joint Venture") between RESB and Bumi Parahyangan Energi Pte Ltd ("BPEPL"), a wholly-owned subsidiary of PT Bumi Parahyangan Energi ("PTBPE"), which holds the remaining 20% equity interest in RJIH.
The Batu Gajah Project PSC ("Project") is located in an established oil and gas production region in South Sumatra. The block consists of 4 areas - West, East, Betara and Sogo Areas. Seven prospects and leads have been identified during the study conducted by MIGAS and RESB with mean prospective resources of 195mmboe. There are existing oil and gas pipeline infrastructure in the area enhancing the economics of developing small and marginal oil and gas fields.
The Project is to be carried out on a PSC basis with Badan Perlaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi ("BP MIGAS"). At this point of time, the PSC has yet to be executed. An announcement on the PSC and/or any other material agreement(s) to be entered into will be made to the Bursa Malaysia Securities Berhad at an appropriate time.
RJIPL, in conjunction with MIGAS conducted a joint study ("Joint Study") on the hydrocarbon potential of the Batu Gajah block in accordance with MIGAS regulations decree 040, 15th June 2006.
The oil and gas exploration business involves an inherent level of risk which is unavoidable. The Joint Study area was selected consistent with RESB's business development strategy to focus and participate in low to medium risk projects in targeted markets in Indonesia and South East Asia.
There is sufficient existing seismic and prospects to facilitate exploration drilling in the 4th quarter of 2007 in accordance with the PSC work programme commitment.
The estimated total capital and investment outlay for this venture is within the region of USD30 million for 3 years.
RJIH is a joint venture company between RESB and BPEPL (collectively the "Shareholders") to carry out interalia, the Project and the relationship among the Shareholders is governed by a joint venture agreement.
RJIPL is to be the designated company to conduct and operate the Project, as Operator.
RESB (or its nominee) shall hold 80% of all of the shares in RJIH.
BPEPL (or its nominee) shall hold 20% of all of the shares in RJIH.
Each of the Shareholders will contribute capital to RJIH in proportion to its shareholding in RJIH.
In accordance with BPEPL's 20% free carry interest in the equity of the Project, RESB shall pre-finance BPEPL's portion in respect of any exploration and/or exploitation costs incurred in relation to or in connection with the Project until the first production of petroleum and/ or natural gas.
For the purposes of developing the Project, RESB agrees to bear 100% of the signature bonus.
BPEPL agrees that where the amounts paid by RESB in accordance with the free carry has not been repaid in full, any dividends payable by RJIH to which BPEPL would be entitled to are to be paid directly by RJIH to RESB.
The oil and gas exploration business involves an inherent level of risk which is unavoidable. Ranhill's focus is to participate in low to medium geological risk projects in targeted markets.
At this point, the Joint Venture and the Project are expected to have minimal risks due to the investments in Indonesia for the exploration prospectively of the said area which can be considered as low to medium risk.
The Board of Directors of Ranhill is of the opinion that the Joint Venture and the Project are in the best interest of Ranhill. (end of release)