KrisEnergy has accepted a binding letter of offer by a ‘major international oil and gas company’ for the disposal of a 30% non-operated working interest in the Andaman II production sharing contract (PSC) in the Malacca Strait, offshore Indonesia.
The binding letter of offer for the disposal was accepted after taking into consideration the future exploration cost and risks associated with deepwater activities, KrisEnergy said on Tuesday.
“The board believes it is more prudent to allocate KrisEnergy’s limited capital to funding near-term development. Completion under the disposal including its terms is subject to inter alia obtaining all necessary approvals from the Government of Indonesia for the assignment of the working interest and the satisfactory completion of due diligence by the intended purchaser,” the company said.
The long stop date for the disposal is March 31, 2020. The terms of the disposal set out in the letter of offer are subject to certain assumptions and the execution and delivery of a definitive sale and purchase agreement and the consideration for the disposal will be payable only upon completion.
The Andaman II PSC is an exploration block over the North Sumatra Basin covering an area of 7,400 sq. km. The disposal is in line with the group’s risk mitigation, intention to reduce future exposure to exploration capital expenditure and strategy to focus its limited financial resources on optimizing operations at its existing producing assets in Bangladesh and the Gulf of Thailand and progressing the development of the Apsara oil field in Cambodia block A.
KrisEnergy noted that, due to confidentiality obligations and the conditional nature of the disposal, the identity of the intended purchaser and the purchase price could not be disclosed at this time but the company would make such disclosure at the appropriate time.
There is no certainty or assurance as at the date of this announcement that the disposal will be completed, KrisEnergy concluded.
Premier Oil is the operator of the Andaman II PSC with a 40% interest and Mubadala Petroleum has a 30% interest.
It is also worth mentioning that Mubadala last July signed an agreement with Premier Oil to farm out a 20 percent participating interest in each of the Andaman I and South Andaman Gross Split Production Sharing Contracts (PSCs). Mubadala Petroleum is the operator of both the Andaman I and adjacent South Andaman PSCs.
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