Sugih obtains majority interest in Selat Panjang PSC

By Romel S. Gurky

IDX-listed PT Sugih Energy Tbk said it has obtained a 55 percent participating interest and operating rights to the Selat Panjang PSC, located in Riau province, Sumatra.

The acquisition comes following the completion of a conditional share purchase agreement on April 18, 2013, in which Sugih acquired 55 percent shares in Petroselat Ltd. from the previous operator of the Selat Panjang block, the company announced last week. The shares were purchased through the ownership by PT Petronusa Bumibakti and International Mineral Resources Inc. for a purchase price of approximately US$88.8 million.

The Selat Panjang block is an already-producing asset, with daily oil output of approximately 300 BOPD, and is expected to produce approximately 5 MMCFD starting in 2013.

President Director of Sugih, Andhika Anindyaguna, said, "The completion of this acquisition is a major accomplishment for Sugih, as the Selat Panjang will become our first producing asset. We expect production from this asset to immediately impact our balance sheet and positively impact our financial performance for FY 2013."

"Furthermore, the Selat Panjang blockfits with Sugih's strategy of acquiring lower-cost assets located in proven onshore basins in Indonesia. We are confident that this asset - along with the rest of our portfolio - holds significant exploration upside, which will deliver value to our shareholders."

The Selat Panjang block is located in the eastern region of Riau province, Sumatra, and consists of a total area of 1,311 km2. The block is adjacent to Kondur's Malacca Strait PSC and is west of BSP-Pertamina's Coastal Plain Pekanbaru PSC.

The Selat Panjang Block consists of two major zones, Sihapas and Pematang. The Sihapas zone has been in production since 1994 with average total annual production of 99,962 barrels of oil. The Sihapas zone has remaining reserves of approximately 7.28 MMBO (2P). Additionally, the Pematang zone has recoverable reserves of approximately 32.7 MMBO and 245 BCF (2P).

Based on geological and geophysical studies and a 3D seismic program, the Selat Panjang block has 7 prospects with total resources of approximately 323 MMBO and 1,455 BCF.

The remaining 45 percent participating interest in the block is held by PetroChina International Selat PanjangLtd.

Editing by Reiner Simanjuntak