Niko Resources Inc., Calgary, has temporarily suspended its vast drilling program in Indonesia pending a reevaluation of its exploratory capital spending priorities.
The company said it is “working on various options to drill for third parties or to assign the contract for the Ocean Monarch rig and related service contracts to third parties for an extended period.”
Niko is mobilizing the Ocean Monarch to the Makassar Strait until it finalizes the decision on the next drilling location. The company is discussing deferrals and redetermination of its borrowing base and is working on options to potentially refinance its credit facility to provide increased funding for its future capital programs.
Meanwhile, Hess Corp. has signed a definitive agreement to assume a 100% interest from Niko in the Semai V PSC offshore eastern Indonesia’s Papua Province.
Two wells, Andalan-1 and 2, have been drilled on Semai V, and one future commitment well is yet to be drilled. Drilling results from these wells indicate hydrocarbon potential remaining on the block, Niko said.
Niko signed a separate agreement to increase its working interest to 100% in the Kofiau PSC offshore Papua Province. That pact took effect before the drilling of the Elit-1 well. Closings of the Semai V and Kofiau transactions are subject to government approval.
Elit-1 has been plugged and abandoned after encountering 10 ft of gas at the top of a 90-ft sand package. The Diamond Offshore Ocean Monarch drilled the well to 3,915 ft in 1,335 ft of water in 9 days under budget and ahead of schedule, Niko said.