Salamander Energy updates Indonesian ops

The following is an edited excerpt taken from UK oil, gas firm Salamander Energy?s Interim Management Statement released Friday (ed)

Production

In August 2010 the Group revised its reserve estimate for the Kambuna field, offshore North Sumatra. It reduced net entitlement proven and probable reserves by 1.8 MMboe (7.5 MMboe on a net working interest basis) as a result of observing faster than expected pressure decline in the Kambuna-3 well. Near term production and cash flow will not be impacted. Further drilling on the Kambuna block is planned for 2011 targeting satellite features that can be quickly tied into the Kambuna facilities.

Exploration & Appraisal

In October 2010, Salamander announced that the Dambus-1 exploration well in the Kutai PSC, East Kalimantan, Indonesia had encountered gas-bearing sands and seen oil shows but in sub-commercial quantities. The well was therefore plugged and abandoned.

In October the Group also announced the spud of the Angklung-1 exploration well in the Bontang PSC and the Marindan-1 exploration well in the Kutai PSC. Operations on both wells are continuing with results expected in the coming weeks.

The Group has commenced an extensive 3D seismic acquisition survey on its operated Southeast Sangatta PSC in the Kutei Basin, offshore East Kalimantan, Indonesia. This data will be integrated with the Group's two prior 3D datasets in the Northern Kutei Basin to provide support for choosing drilling locations ahead of the first exploration well on the licence in 2011.

Bangkanai Acqusition

In November 2010 the Group announced that it had agreed to acquire the issued share capital of Elnusa Bangkanai Energy Ltd, the owner of a 69% operated interest in the Bangkanai PSC located in the Barito Basin, onshore East Kalimantan, Indonesia. The Bangkanai PSC contains the Kerendan gas field, which has an approved Plan of Development and is expected to be on-stream by 2014. There is also in excess of 1Tcf of potential exploration upside on the PSC. Two exploration wells targeting in excess of 350 Bcf are planned for 1Q 2011.

Nine E&A wells planned for 2011

? Four E&A wells targeting East Kalimantan gas:
o Two exploration wells on the Bangkanai PSC (69%);
o one appraisal well on the Tutung discovery, Bontang PSC (100%),
o one appraisal well on the South Sebuku discovery, Bengara I PSC (41%) in the Tarakan basin

? Three exploration wells in the Kutei basin:
o one well in the South East Sangatta PSC (75%), and
o two in the Kutai PSC (23.4%)

? Two exploration wells on the Kambuna PSC (50%), offshore North Sumatra (end of edited excerpt)