AED Oil acquires acreage in Indonesia
AED Oil Ltd. has agreed to purchase two wholly owned subsidiaries of Nations Petroleum that hold interests in oil and gas contract areas in Indonesia.
OGJ Oil Diplomacy Editor
LOS ANGELES, Feb. 10 -- AED Oil Ltd. has agreed to purchase two wholly owned subsidiaries of Nations Petroleum Co. Ltd. that hold interests in oil and gas contract areas in Indonesia.
AED said it will pay Calgary-based NPC $1.5 million and will issue the firm 12 million shares of AED for 100% and 60% respective stakes in permits in West Papua and Madura Island.
The Rombebai area covers 5,795 sq km and lies in northern coastal Papua, while the South Madura area is primarily onshore and covers the southern part of Madura Island.
AED said four wells drilled in the Rombebai contract area in the 1950's by Royal Dutch Shell PLC encountered natural gas, but the reserves were not developed as the firm was exploring for oil.
Further testing by NPC indicates that the permit's Gesa reservoir could contain 5 tcf of gas, but an AED executive acknowledged that the firm faces a large range of uncertainties as the reservoir sands have yet to be drilled, AED said.
Analyst IHS Global Insight agreed, saying, “AED has high hopes of building an LNG plant at Rombebai to monetize any reserves discovered” but that, “significant uncertainties as to the potential of the area remain, particularly as reservoir sands have not yet been penetrated through drilling.”
Last November, AED signed a letter of intent with NPC to buy its wholly owned subsidiary that holds a 50% operating interest in the Brunei Block L oil and gas permit, which comprises a large production-sharing agreement covering about 2,200 sq km both onshore and offshore.
In the preceding 12 months, NPC had undertaken a $20 million 3D seismic program over a large part of Block L, delineating several drill-ready prospects. AED also said that planning had reached “advanced stages” for a two-well drilling campaign for early 2010.
At the time, AED managing director Pedro De Souza said the firm was “also evaluating Asian assets held by other Nations' wholly owned subsidiaries” and that “an exclusivity period has been agreed over these assets.”
Around the same time, a leak was reported at Puffin field, which had been suspended since May after Sinopec and AED terminated the charter contract of Sea Production for the use of the Front Puffin floating production, storage, and offloading vessel at the field for alleged breaches related to occupational health, safety, and the environment (OGJ, Nov. 2, 2009).
Contact Eric Watkins at firstname.lastname@example.org.