SPC uncertain about E. Java discovery prospect

Singapore Petroleum Corp. Reported on Monday it had set aside impairment provision of $43.3 million relates mainly to drilling costs incurred from 2003 to 2006 for the Jeruk discovery in Sampang PSC offshore East Java.

?In the continuing review of the progress and prospects for the Jeruk discovery under the current oil price environment and outlook, the company has concluded that there is significant uncertainty about the possibility of a future commercial development. The company has, therefore, adopted a prudent approach at this juncture and provided for the full impairment of the drilling costs incurred thus far. There is no cash flow impact from this impairment provision as this relates to provisioning for past costs that were capitalized,? the company said in its First Quarter Financial Statement.

The Jeruk discovery was made in 2003 with the Jeruk-1 exploration well. The discovery was further appraised through the Jeruk-2, ST-4, ST-5 (side tracks 4 and 5) and the Jeruk-3 well from 2004 to 2006.

After 2006, the partners worked towards a commercial development despite the technical complexities of the reservoir. However, there has been no significant progress, hence the current provision. SPC continuously reviews its E&P portfolio to ensure that the carrying amounts remain recoverable, it said.

SPC has 21.8 percent economic interest in Jeruk discovery with operator Santos Limited having 45 percent. Other partners in Jeruk are Cue Energy and Medco Energi Internasional. (alex)