Sound Oil sells 20% interest in Citarum PSC

By Romel S. Gurky

Sound Oil, upstream oil and gas company with assets in Italy and Indonesia, announced that it has agreed to sell 20 percent interest in the Citarum PSC, onshore Java to Pan Orient Energy (Citarum) PTE Limited, the operator.

In a media statement, the company said, in consideration for the working interest, POE have committed to Sound Oil to waive a total of US$2.4 million of cash calls, pay Sound Oil $10 million in cash contingent on revenues from the first discovery, and pay Sound Oil a further $6 million in cash contingent on revenues from the second discovery.

All payments are guaranteed by the ultimate parent of the purchaser, Pan Orient Energy Corp, and are structured as 100 percent royalties on revenues from the discovery, capped at the agreed contingent consideration.

The current Citarum drilling campaign involves three commitment wells. The first well, Cataka, was abandoned by the operator following significant delays and overspends and did not reach its target depth. The second well, Jatayu, also suffered significant delays and overspends and, despite some uphole gas shows, is yet to reach its target depth.

Drilling of the third well, Geulis, is ongoing. To complete the PSC commitments, Cataka, and possibly Jatayu, will need re-drilling in what have proven to be very challenging geological conditions.

Editing by Dadan Wijaksana