Sound Oil updates Citarum ops
Thursday, September 30 2010 - 02:12 AM WIB
Chairman?s Statement
The long-running acquisition of 865 km 2D seismic data over a wide area of the Citarum Production.
Sharing Contract was completed in July and the processed results are currently being interpreted. This data fulfils the outstanding 750 km firm seismic commitment on the PSC. The new data covers an area of complex geology south of several existing oil and gas fields along the southern flank of the Northwest Java Basin. Preliminary interpretation of the data has revealed a number of interesting leads and prospects, including a structure in the Subang area at the level of the Parigi carbonate formation.
Although this is complex, at its maximum extent this structure is recognised by the Operator to be more than 25 km2 in area and prospective for over 500 Bscf(1) of gas (unrisked, P50 basis(2)). Interpretation of the other areas further east at Sumedang and Majalengka, is expected to be completed by early October.
Plans are in preparation to drill three exploration wells commencing in 1Q2011 in fulfilment of the remaining firm drilling commitment on the licence. The final locations will be decided in autumn 2010 and will be chosen from an inventory of existing prospects in the Jonggol (western) area and from any structures identified in eastern areas from the new seismic data.
A further extension of the First Exploration Period (Contract Years 1-3) to October 2010 of the Citarum Production Sharing Contract has already been negotiated with BPMIGAS(3). Granting of a further one-year extension to October 2011 is fully expected in view of the firm drilling plans presented by the Operator.
As a result of equity changes in Bangkanai PSC, Sound but instead is carried for its 5% interest. This carry covers development costs for two exploratory wells up to the delivery of first gas. Senergy(4), the independent petroleum consultancy company, has re-valued Sound?s net entitlement for best case contingent resources in Kerendan Field POD at 6.9 Bscf + 0.07 MMbo(5). Their calculation of the NPV is $5.6 million.
Additional net contingent prospective resources for discovered, but un-contracted Kerendan gas are estimated at 5.3 Bscf + 0.05 MMbo. Senergy has also identified substantial net P50 prospective resource potential at Bangkanai PSC of 227 Bscf in four exploration prospects where chances of success range from 5% to 35%.
Cash balances in sterling terms at the end of the period were ?9.1 million compared with ?10.6 million at end 2009.
Due to the ?13.4 million write down of the Bangkanai exploration and evaluation asset, the Group incurred a loss after tax of ?13.9 million in the first six months of 2010 (2009 ?1.9 million). This included exploration costs of ?197,000 (2009 ?244,000) and administration costs of ?685,000 (2009 ?610,000).
The recovery in the US$ since mid 2009 resulted in an unrealised gain on holdings of that currency of ?341,000 compared with a loss of ?1,028,000. This left a net loss, prior to the write down, of ?531,000 (2009 loss ?1,861,000).
In the balance sheet, the currency movement resulted in an increase of ?2 million in the foreign currency reserve in the balance sheet. However, the ?13.4 million write down resulted in total assets and equity decreasing by ?12.7 million to ?20.2 million.
The Company has reduced its farm in liabilities at Bangkanai and enters the expected drilling phase at Citarum with sufficient funds for this programme. Having substantially reduced our commitments we are now in a position to widen our range of interests and are actively investigating opportunities both in Indonesia and elsewhere. (end of excerpt)
Editor's Note:
Sound has 20 percent interest in Citarum. Canadian firm Pan Orient Energy Corp is the block?s operator with 69 percent interest. The remaining 11 percent is held by Malaysian firm Ranhill Berhad.