Ophir acquires Indonesian PSCs

October 27, 2014

Ophir Energy plc entered into an agreement with Niko Resources to acquire interests in seven deepwater production-sharing contracts (PSCs) in Indonesia.

Image from Ophir.

The PSCs have equity interests ranging from 18.5% to 100% and marks the company's entry into Indonesia. Ophir will become operator of six of the PSCs with partners Statoil and Eni.

Upon the terms of agreement, Ophir will pay Niko US$31million on completion of the transaction, with further success payments payable on the declaration of commerciality of up to four discoveries, and consequently first production from up to four future developments. In aggregate, the total further consideration payable on success is capped at $56million.

The transaction is subject to approval by SKKMiGas and the Government of Indonesia.   

Total acreage of the PSCs is approximately 21,500sq km with significant 2D and 3D seismic data already acquired by Niko. Multiple leads and prospects, along with underexplored new plays, have been identified across the portfolio, across a mix of clastic and carbonate play types in both proven and frontier basins.

Ophir says the licenses are split broadly into three core areas: West Papua, Western Birds Head and the Makassar Strait.

The West Papua area is frontier and potentially high-impact, primarily prospective for oil within a carbonate play in which reservoir quality has been partially de-risked by drilling to date. 

The Western Birds Head area, prospective for both oil and gas in clastic and carbonate plays, has been de-risked by existing discoveries on the Kofiau PSC.

The Makassar Strait area is a proven, world-class hydrocarbon province in which several large fields feed the multi-train, but now under-utilized, Bontang LNG plant located onshore East Kalimantan.

The acquired acreage has already seen some 3D seismic acquisition and the maturing of several leads and prospects that could be commercialized via this route with the threshold for commercial volumes as low as c.200BCF.

The initial focus of activity will be to re-interpret the existing 3D seismic data and to commission new 3D surveys on several blocks. It is expected that the first drilling campaigns are likely to start early 2016. Ophir may decide to reduce its cost exposure to some of these wells prior to drilling.

Total net remaining liabilities and minimum spend commitments under the current terms of the PSCs are estimated at $1.3million.

 Ophir says the agreement brings access to large acreage positions in highly prospective basins and expands the company’s footprint in South East Asia, following the award of acreage offshore Myanmar earlier this year.

“This deal represents a significant reloading of the company's exploration portfolio, expanding our gross acreage by 40% and in combination with Ophir's recent Myanmar PSC award, positions Ophir as a leading deepwater Asian explorer,” says Nick Cooper, Ophir CEO. “We look forward to delivering a number of high impact wells from this new Asian portfolio as well from our existing African assets in the coming years."

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