Salamander holds rights issue to help fund 4 wells drillings

By Romel S. Gurky

London-listed Salamander Energy plc will complete the drilling of a minimum of four wells in the company-operated South-East Sangatta and Bontang PSCs in the North Kutei basin, East Kalimantan, which will be funded by half of the proceeds of a rights issue it announced Friday.

In a statement, Salamander announced an underwritten rights issue to raise net proceeds of approximately US$201 million (?124 million) through the issue of up to 100,654,935 new ordinary shares.

?The equity proceeds will provide a level of funding for both the drilling and a limited testing program for the initial four wells (including one well already pre-funded from the 2012 program),? the statement said.

Salamander is currently negotiating as part of a consortium of operators with a rig provider for a semi-submersible rig capable of testing these prospects. A memorandum of understanding has been signed and the tendering process is underway.

If such a rig is not secured for the four well programme, the company estimate that a further 12 months could be lost as it would need to re-tender for a suitable right. Under this scenario, there is a significant risk that the South-East Sangatta and Bontang PSCs will have to be relinquished as it may not be able to commence drilling these prospects before the end of 2013.

The North Kutei is one of the company's three core areas, with potential mean recoverable resources of c.3 Tcf of gas and 400 million barrels of oil. It is located within approximately 100 kilometers of the Bontang LNG plant.

Editing by Dadan Wijaksana