Pan Orient to buy Indonesian interests from Fuel-X

Pan Orient Energy Corp., Calgary, agreed to buy Indonesian interests held by Fuel-X International Inc. of Alberta, which was placed in receivership in September 2007.

Sep 14th, 2009

By OGJ editors
HOUSTON, Sept. 14
-- Pan Orient Energy Corp., Calgary, agreed to buy Indonesian interests held by Fuel-X International Inc. of Alberta, which was placed in receivership in September 2007.

The main interest is a 30% nonoperated interest in the 2,285 sq km Tungkal production-sharing contract in South Sumatra. The other interest is a $5 million receivable payable upon first commercial gas delivery from Ruby gas field in the Sebuku PSC off East Kalimantan (OGJ Online, May 2, 2007). Development was approved in mid-2008.

The purchase price, $7.5 million (Can.) in Pan Orient stock, will be adjusted for revenue, expenses, and capital outlays related to the 30% participating interest in the Tungkal PSC from Aug. 31 to the closing date, and these adjustments will be paid largely in cash.

The Tungkal PSC has several discoveries, including Mengoepeah South in 2007, the discovery well encountering 70 m of net oil pay and testing at a combined rate of more than 2,000 b/d of oil above 1,200 m true vertical depth. Gross production is 800 b/d, of which 240 b/d is net to the Fuel-X interest.

Indonesia approved a revised Mengoepeah development plan in April that includes up to 10 development wells and the workover of existing wells. Development drilling is under way and anticipated to be completed by yearend with a target of gross production of 2,000-3,000 b/d, or 600-900 b/d net to the Fuel-X interest.

One high impact exploration well is to spud in the fourth quarter and be completed by yearend. Tungkal is next to the Pan Orient-operated Batu Gajah PSC, where seismic is being shot and a multiwell exploration drilling program is to start in the first half of 2010.

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