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NuEnergy Recommences Pilot Production at Muara Enim PSC, Indonesia

Source: www.gulfoilandgas.com 5/28/2013, Location: Asia

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NuEnergy Gas Limited is pleased to announce that the pilot production operations recommenced at the Muara Enim PSC Pilot Production Site in South Sumatra Indonesia on the 25th of May 2013. With completions across 5 coal seams via the use of radial jet technology, NuEnergy expected gas and water production to exceed past results. This expectation has been met with gas production recommencing at higher rates within two hours of the commencement of dewatering operations.

NuEnergy’s Chairman Mr Graeme Robertson commented: “We are pleased to have successfully recommenced pilot production at Muara Enim, representing another important step towards achieving our first gas sale, expected in December 2013. Gas water production has exceeded our expectations and we continue to work with an existing gas buyer and our project partner PERTAMINA to achieve this goal.

NuEnergy is now close to awarding a drilling contract to one of a shortlist of contractors with a view to committing to a two well development program (with option to drill more) to complete the Muara Enim PSC pilot production site. The drilling of the next two pilot wells is scheduled to commence within the next six weeks. Dewatering operations will continue in parallel with drilling operations for the next two pilot wells, which will be connected to the pilot site as they are completed.

Given the high gas prices and significant unmet demand for gas in South Sumatra and the regulatory approvals underway to approve the sale of pre-plan of development production, some conversion of contingent resources to reserves is expected in the coming months. As the pilot program gains maturity, NuEnergy will work in co-operation with our off-take partner, PT DPS, to commercialise the pilot gas produced at the pilot site.

Current production at the pilot site is sufficient to generate on site power and offset operations costs in the order of US$2,000 per day. With a fully operational pilot plant on track for completion by year end, the forecast 1.5 mmscfd of CBM production is expected to generate revenue in the order of US$15,000 per day.

NuEnergy’s Chief Executive Officer Christopher Newport said today: “The Company is now working to finalise well design and to secure a suitable rig to complete the remaining work on pilot wells at the Maura Enim pilot production site. Additionally, the NuEnergy exploration team has identified areas in our PSC’s which are thought to contain very thick coals seams. These seams will be the target of NuEnergy’s exploration program in 2014.

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