Salamander expects oil production to rebound in 2014

By Roffie Kurniawan

London-listed Salamander Energy Plc expects its oil production will reduce to between 12,000 and 13,000 barrels per day (bpd) this year from 18,600 bpd in 2011 as a result of the sale of its interest in the ONWJ and SES blocks in the year.

However, the oil production will bounce back to 20,000 bpd in 2014, supported by the increase of production volume from the Bualuang field in Thailand and commencement production from the Kerendan field within the Bangkanai PSC in Central Kalimantan and South Sembakung gas field within Simenggaris PSC in Tarakan basin, East Kalimantan.

In its 2011 annual report, Salamander said it has finished re-evaluation of previous operators? work program in the Kerendan field. It has also completed requisite upgrades to the rig and obtained the outstanding environmental permits.

?This will enable the group to execute an exploration and development drilling campaign in 2012 that
 will fulfill the requirements of the signed Kerendan gas sales agreement and target additional material reserves in satellite prospects which have low
risk characteristics,? it said.

Salamander operates the Bangkanai PSC in the Barito basin, Central Kalimantan, having acquired a 69 percent operated interest in this PSC in 4Q 2010 and deepened its interest to 80 percent in 4Q 2011. The license contains the Kerendan gas field development and a number of additional step-out exploration targets.

The Kerendan gas field contains 280 billion cubic feet (bcf) of certified resource. In 2011, Salamander signed a gas sales agreement (GSA) for the supply of
 120 bcf of gas leading to the company?s booking of 
19 million barrels of oil equivalent (mmboe) of 2P reserves. The gas is being sold to PLN for local power generation.

It said a 320 MW power plant is being constructed 3 km from the Kerendan field with the capacity to handle three times the volume of the initial GSA. Given this ready market for the gas, Salamander hopes to commence the process of commercializing the remaining 160 bcf of certified contingent on completion of its 2012 development drilling.

Furthermore, there is over one trillion cubic feet (tcf) of exploration upside on the Bangkanai PSC. The most immediate prospects for drilling are West Kerendan and Sungai Lahei, which are scheduled to be drilled in second half of 2012.

?In the event the group discovers upwards of 1 tcf of gas in the Greater Kerendan area then it will be economical to build a pipeline to East Kalimantan where there are multiple commercialization options at a higher price than those that can be realized from local power,? it said.

Salamander has also been awarded two Joint Study Areas (NE Bangkanai and West Bangkanai joint studies) adjacent to the Bangkanai PSC. These present it with potential acreage additions in an area where the company is developing its understanding of the regional petroleum geology and where there is a clear market for incremental gas volumes to be commercialized.

Salamander?s position in the Greater Kerendan area exhibits a number of the characteristics the company looks for when entering a new region: hard resource with upside development potential to anchor position; exploration and appraisal upside; and the opportunity to expand into surrounding acreage.

Editing by David Mustakim