Serica updates Indonesian ops

The following is an excerpt taken from Serica Energy plc Q1 report issued Friday. (ed)

Glagah Kambuna TAC - Kambuna Field, Offshore North Sumatra (Serica 50%)
Progress has continued in 2009 to date towards the first production from the Kambuna field. The 58 kilometre offshore and onshore pipeline has been laid and tested. The offshore platform topsides were successfully installed in March and offshore hook-up and commissioning are in progress. Work continues with the construction of the onshore gas separation and processing facility. A leased early production facility, utilising some of the permanent facilities and capable of producing at DCQ rates will be delivered to site in June for production to begin around mid-year 2009. Over the following six to nine months the permanent facilities will be completed.

There are currently three gas sales contracts relating to the Kambuna field. 28 mmscfd of gas will be sold to the state electricity generator, PT Perusahaan Listrik Negara ("PLN") and 12 mmscfd to PT Pertiwi Nusantara Resources ("Pertiwi"). The approximate contract prices for PLN and Pertiwi are US$5.40 and US$7.00 per mcf respectively, both escalating at 3% per annum. In addition to these sales contracts, terms of a third contract were agreed in May 2009 with PT Pertamina (Persero) to allow for LPG extraction from the sales gas stream. Once LPG extraction begins, around the end of this year, field production will be increased by up to 10% in order to allow for the extraction of LPG while maintaining contracted gas sales volumes, enhancing the project economics. Once production commences, the field partners plan to enter into a further contract for the sale of at least 10 mmscfd of gas, taking the total daily contract volume for the field to 50-55 mmscfd in 2010.

In addition to the gas, the Company is finalising the details of a condensate sales contract for the expected 4,000-5,000 bpd of condensate to be separated from the gas. This is expected be sold at a price close to that of light crude oil.

Kutai PSC (Serica, 78%)
Serica is the operator of the Kutai PSC and currently holds a 78% interest. This interest will reduce to 54.6% after completion of the transaction with Salamander Energy plc for the sale of a 23.4% interest in the PSC, as announced in July 2008. Completion is subject to certain approvals and consents, including that of the Indonesian government.

In the onshore part of the Kutai PSC, Serica is currently completing a 2D seismic survey. While drilling the seismic shot holes a number of oil seeps were encountered, demonstrating the existence of a working petroleum system in the onshore part of the acreage. (end of excerpt)