Salamander sells interest in Indonesian oil, gas blocks

UK oil, gas firm Salamander Energy announced Friday that it has agreed terms with Risco Energy Pte Ltd for the sale of its five per cent interests in the Offshore Northwest Java (ONWJ) and Southeast Sumatra (SES) PSCs respectively.

The cash consideration is US$55 million plus working capital adjustments of $1.3 million, with a further deferred cash consideration payable upon the buyer's participation in any extension of the ONWJ PSC, the company said.

Risco is a Singapore-based energy investment company whose board of directors includes former executives of IDX-listed oil, gas firm PT Energi Mega Persada Tbk Tom Soulsby and Chris Newton. Bob Kamandanu, a trusted executive of conglomerate Ibrahim Risjad also sits on the board.

Effective date was set on June 30th 2011 and the deal is not subject to any additional approvals.

In addition, a deferred cash payment is to be made upon confirmation of Risco's participation in the extension of the ONWJ PSC. The amount of the deferred payment will be dependent on the timing and level of participation in the ONWJ PSC extension. For a 5% participation, the payment will be capped at $4 million.

According to the company, production attributable to the net 5% interests in the first half of 2011 averaged approximately 6,000 boepd and proved and probable reserves attributable to the interests are estimated to be 13 million barrels of oil equivalent as at the mid-year 2011.

The ONWJ and SES PSCs came into production in 1971 and are currently in long-term decline. The assets are currently operated by PT Pertamina Hulu Energi (ONWJ) and CNOOC SES Ltd. (SES).

The PSCs are currently in their second extension phase, and are due to expire in January 2017 (ONWJ) and September 2018 (SES).

The assets were originally acquired by Salamander in the first half of 2006, since when the ONWJ and SES fields have produced approximately 12.5 million barrels of oil equivalent net to Salamander. (robert)