Sound Oil seeks partner for Bangkanai block
Sound Oil, the upstream oil and gas company with assets in Indonesia, is looking to reduce its level of exposure on the Bangkanai production sharing contract (PSC) and continue with its efforts to attract new investors into the licence with a view to re-starting the stalled exploration activity on the block.
Sound Oil has received notice from Elnusa Bangkanai Exploration Ltd seeking to terminate Sound Oil’s interest in the Farm In Agreement due to the delays in completion of the work programme at Bangkanai. The Company has received legal advice that this is unfounded and it intends to contest this vigorously.
It is possible that the Bangkanai PSC might lapse at the end of its initial exploration period which expires on 31 December 2009, although the Company believes that an extension will be granted to allow the development of the Kerendan gas field which has an approved plan of development (extant until mid-2011).
The company’s assets have recently been independently evaluated by industry experts Senergy (GB) Limited which identifies as follows:
(1) Six prospects which are available for drilling and which may contain in the mid case (P50), a combined total of 4.8 Tscf3 of unrisked gas prospective resources (1.6 Tscf net attributable to Sound Oil). These prospects have varying degrees of risk (chance of success) ranging from 5% to 35%.
(2) Two of these prospects to be in the giant category with combined mid case (P50) gross gas prospective resources of 4.4 Tscf (1.5 Tscf net to Sound Oil).
(3) The Estimated Monetary Value4 at 10% of the six prospects is US$53 million.
(4) The Kerendan gas field in Bangkanai PSC contains 243 Bscf5 (P50) of gross gas contingent resources of which 133 Bscf will be committed to a power station to be built near the field. Senergy estimate the Net Present Value (10%) of Sound Oil’s share of this gas field to be $20 million with a chance of commerciality at 90%.
(5) A recognition of incremental value in the uncontracted gas at the Kerendan field (101 Bscf gross contingent resources).
Sound Oil reported considerable progress has been made towards completion of the outstanding work commitments on the Citarum PSC and the Company is currently involved in an extensive 1,020 km seismic program over this PSC which extends over 2,878 sq km.