Cooper Energy Limited advises that its wholly-owned subsidiary, Cooper Energy (Seruway) Pty Ltd, has elected to withdraw from the offshore Seruway Production Sharing Contract (PSC) in North Sumatra, Indonesia.
Cooper Energy acquired a 22.5% interest in the Seruway PSC in 2007 and drilled the Gurame-1X well earlier this year. Despite encountering some gas shows, the Gurame-1X well was unsuccessful. In addition to the Gurame-1X well the Seruway Joint Venture recently shot a 2D seismic survey over a number of gas discoveries on the Ibu Horst geological feature in the centre of the block.
Cooper Energy’s exploration team has just completed the integration of the results from the Gurame-1X well into the 2007 3D seismic and completed an interpretation of the recently acquired 2008 2D seismic. This review unfortunately indicates that the Seruway PSC has no commercially viable prospects.
In light of this result and the fact that CESL would be required to make a number of significant future cash call payments in US Dollars to the permit operator, Transworld, to retain its interest, Cooper has elected to exit from the PSC. Cooper’s Board believes this to be a prudent decision which is consistent with the Company’s risk management strategy for its international exploration portfolio.
The other non-operator, Salamander Energy, has also elected to exit from the PSC.
Cooper Energy loaned CESL funds to complete the acquisition of the 22.5% interest in the Seruway PSC, drill the Gurame-1X well and acquire the 2008 2D seismic. As a result of CESL’s exit from the Seruway PSC, Cooper Energy will incur a write off of approximately A$19.8 million. The decision to exit will not impact on Cooper Energy’s current cash levels but will assist in preserving future cash levels.
Commenting on the announcement, Cooper Energy’s Managing Director, Mike Scott, said: “Our international growth strategy remains in its infancy and whilst it is always disappointing when a permit is exited we are fortunate to have a number of international exploration and appraisal targets in Indonesia and Tunisia that provide a better risk and reward investment profile. We remain confident our international exploration programme will replicate and build upon the success we have had to date across our Australian permits.”