announced it is to purchase a 15% interest in the Duyung production sharing contract in Indonesia’s West Natuna basin, as it continues to build its portfolio in SE Asia.
The asset, which contains the contains shallow water Mako gas field, has gross 2C resources of 276 Bcf recoverable dry gas, and a gross 3C 392 Bcf, according to an independent review by Gaffney Cline & Associates.
Coro will pay an initial $4.8 million for the acquisition, via $2.95m in cash and $1.85m in Coro Energy shares. It has also committed to spend $10.5m in partial funding for drilling to West Matima Exploration Limited, who are owner and operator of Duyung - 90% owned by Conrad petroleum, a private company in Singapore, and 10% owned by AIM listed Empyrean Energy.
According to the company, it represents an effective acquisition price of $0.34/MMBtu on a 2C basis. The cash element is being underwritten by institutional investors - Lombard Odier Asset Management and the Pegasus Alternative fund.
The funds are to be raised via the issue of €22.5MM worth of Eurobonds, issued at 85% of par value, representing €19.1m (£16.73m) in cash, which the company detailed in a separate announcement. The ability to raise more than its current £16m market cap suggests strong institutional support exists for the company, yet, shares were trading 10% lower at 2.375p each
James Menzies, Chief Executive Officer, commented
"Mako is a high quality asset with a great address: a large undeveloped resource in a prolific basin and close to existing infrastructure with capacity, providing access to a hungry market in Singapore.”
He added: “We are also excited by the exploration potential to more than double the size of the resource - this is very significant, high value, low risk step out exploration located above and beneath the field itself.”
The company stated that the PSC also contains low risk step out exploration upside, specifically, the Tambak prospect (scheduled test drilling in 2019), with a mid-case prospective resource potential 250Bcf, and a geological success of 45%, and the Mako shallow prospect with a mid-case resource potential of 100Bcf and a geological success of 75%.
A field development plan has been submitted to Indonesian authorities, where the operator proposed a four well development scheme, as well as an additional four wells as a second phase, with production rates expected to be up to 90MMscf/d.
Interestingly, the Mako field is approximately 16km from the West Natuna Transportation System, offering the potential to sell gas directly into Singapore. According to the company, a Heads of Agreement was recently signed with a gas buyer.
Coro Energy CEO praised the operator Conrad Petroleum for bringing the project forward, advancing the technical understanding of the field and surrounding prospects. He sees “this as a potential hub for wider value creation in the region” and intends to report on further progress shortly.
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