Xstate Resources Limited advises that it has signed a memorandum of understanding (“MOU”) to acquire 100% of privately owned Blue Sky Langsa Ltd (“BSL”) effective 1 January 2013.
Xstate Resources Limited will acquire 100% of the Langsa Technical Assistance Contract (TAC) with Pertamina, located in 70 to 100 metres of water, 50 kilometres offshore North Sumatra, Indonesia. The Langsa TAC field includes the ‘L’ and ‘H’ Oil Fields and related oil field equipment inventory. Production is from limestone reservoir rocks about 1600 metres below the sea surface.
These fields have been developed with 6 subsea wells, and are currently producing profitability at a rate of approximately 340 barrels of oil per day and zero water-cut from one well via a dedicated leased Floating Production and Storage and Offloading (‘FPSO”) Vessel. The remaining development wells are shut-in and are workover candidates to recover additional oil.
The plan is to increase production from the fields.
Planning is advanced to complete the suspended H-3 well for production of oil from the undeveloped northern part of the H Field, and to workover selected shut-in wells (together referred to as “Workover Program”). The H-3 exploration well drilled by Mobil tested oil at rates of over 3500 bopd before being suspended for future production.
The expectation is that after a successful Workover Program the field could be producing at an initial rate in excess of 3000 bopd.
Managing Director Gary Jeffery stated: “This acquisition provides an excellent platform from which Xstate can grow. Expected cash flow from the Workover Program can be used for exploration on the Langsa TAC and other projects that are under consideration. The location of the Langsa TAC adjacent to other oil discoveries also provides opportunities for growth.
“Having an enthusiastic major shareholder, who prefers that shareholders’ funds are used for oil field development rather than being transferred out of the company as vendor consideration, is a significant advantage for existing shareholders.
“As a result all shareholders interests are aligned.
“Shareholders are encouraged to review the separate presentation document which includes additional information ”
February 14, 2013