Conrad Asia Energy and its subsidiary West Natuna Exploration have signed a binding term sheet with Empyrean Energy to settle historical cash call arrears related to the Duyung Production Sharing Contract in Indonesian waters.
The agreement outlines a series of transactions that will see Empyrean’s 8.5% participating interest in the Duyung PSC transferred to West Natuna Exploration, followed by the incorporation of a Singapore-based special purpose vehicle in which Empyrean will hold an 8.5% shareholding and Conrad 91.5%.
Following the interest transfer and the planned transfer of West Natuna Exploration’s 75% participating interest in the Duyung PSC to Nation Petroleum Natuna Barat, all shares in West Natuna Exploration will be transferred to the special purpose vehicle.
The arrangement also provides for the withdrawal of a previously issued withdrawal notice served on Empyrean under the joint operating agreement.
Empyrean will make a cash payment of $353,388 to Conrad upon completion of the transactions, with a further $353,388 to be paid from Empyrean’s share of dividends from the special purpose vehicle. These payments will represent full and final settlement of all past claims by Conrad and West Natuna Exploration against Empyrean.
Completion of the transactions is subject to customary conditions precedent, including approvals from Indonesia’s upstream regulator SKK Migas for the Empyrean and Nation Petroleum Natuna Barat interest transfers, as well as the execution of formal documentation.
Following approval of the Coro, Empyrean and Nation Petroleum Natuna Barat transfers, West Natuna Exploration will hold a 25% participating interest in the Duyung PSC.
The term sheet is expected to support further progress on the previously announced Mako farm-down transaction, including the release of the first $5 million tranche of consideration payable by Nation Petroleum Natuna Barat. Empyrean will be entitled to 8.5% of that consideration.
West Natuna Exploration will remain operator of the Duyung PSC and continue to be responsible for development of the Mako gas field and its operations once production begins.
“The Term Sheet between Conrad and Empyrean will allow us to put behind us a dispute, creating strong stakeholder alignment with all project participants. Additionally, it will expedite the upfront first cash payment of $5 million (out of the total consideration), targeted in the coming weeks. It’s now full steam ahead with project execution geared to deliver our previously announced Q4 2027 production start-up date, and total project financing secured,” said Miltos Xynogalas, Managing Director and Chief Executive Officer of Conrad.
The Duyung PSC is located in Indonesia’s West Natuna area, around 100 kilometers north of Matak Island and about 400 kilometers northeast of Singapore.
Upon completion of all interest transfers, Conrad will hold a 22.875% operated interest in the Duyung PSC through its interests in West Natuna Exploration.
The Mako gas field within the PSC contains 2C contingent resources of 376 billion cubic feet, with 58 Bcf net attributable to Conrad following the transactions.
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