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Andalas Energy and Power to Acquire Indonesian Oil Project

Source: www.gulfoilandgas.com 8/29/2018, Location: Asia

AIM-listed Andalas Energy and Power has entered into a conditional agreement to acquire an interest in the Bunga Mas Production Sharing Contract (PSC), located in South Sumatra, Indonesia.

Highlights:
- Acquisition of initial 25% participating interest in Bunga Mas PSC via a corporate acquisition with right to increase interest to 49% and then 100%.
- Consideration of 19,200,000 Andalas ordinary shares to be issued as follows:
+ 9,600,000 shares on completion of the acquisition of the initial participating interest.
+ 9,600,000 shares on regulatory approval of increase of interest to 49%.

- The consideration shares, representing 6.5% of Andalas’ current issued share capital, to be issued at the prior 5-day volume weighted average at the date of issue.
- Completion is subject to various matters including extension of the exploration period of the PSC.
Andalas to undertake new exploration and development of the PSC as an exclusive operation entitling it to 100% of the cash flows available to participating interest owners under the PSC.
- The Bunga Mas PSC is located onshore, near existing upstream facilities, in the prolific producing South Sumatra basin, Indonesia:
- Within the PSC, the Bunga Mawar field has been assessed by the operator to contain 2C contingent resources of 0.22 million barrels of oil ('MMBO') and best prospective resources of 2.09 MMBO (gross) in the Air Benakat formation.

- Initial work programme plans to test the Bunga Mawar field and to convert prospective resources to additional contingent resources which will form the basis for a plan of development.

- Further details of work programme to be announced on completion.

- The acquisition includes a pro-rata share of unaudited brought forward past costs that are recoverable by participating interest owners from future revenues in priority to various other distributions ('Cost Pool').

- Previous expenditures on the PSC total US$111,695,000 (gross) of which a proportion is expected to be Cost Pool attributable to the Bunga Mawar project and will, assuming recovery is permitted by the regulator significantly enhance the projects economics.

- A further detailed description of the transaction and the asset, including a royalty created by the vendor, is set out below.

Simon Gorringe, CEO of Andalas Energy and Power, said: 'We are very pleased to have reached agreement with the vendor for the acquisition of interests in the Bunga Mas PSC. It is an all share deal structured to align the interests of the vendor and our shareholders and ensure that consideration does not pass and additional costs are not incurred until the deal completes.

'The PSC contains the Bunga Mawar field, which was discovered in 2012 by the drilling of the Bunga Mawar-1 well into the Air Benakat formation, which produced sweet light crude of 45o API from a depth of 704 m. Our initial work programme will target the Bunga Mawar Field, following which we expect to submit, for approval, our Plan of Development to bring the field into production and will then look to appraise and develop the other oil and gas accumulations on the licence.'

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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