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First Gas from the Kambuna Field

Source: 8/11/2009, Location: Asia

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Serica Energy plc is pleased to announce that gas sales have commenced from the Kambuna field, offshore Sumatra, Indonesia. Serica holds a 50% working interest in the field, which will provide the Company with its first significant production revenue.

Following the mechanical completion and commissioning of all facilities, initial production began from the Kambuna-4 well, which was opened up on 5 August, delivering gas and condensate to the onshore receiving facilities at Pangkalan Brandan, North Sumatra. Commercial sales began on 11 August, with gas being introduced to the pipeline system for transportation to the Belawan Power Plant.

After start up, production is targeted to build to a plateau of 40 million standard cubic feet per day (“MMscfd”) of dry gas and approximately 4,000 barrels of condensate per day. Upon completion of the on-going upgrade and refurbishment of the Pertamina LPG plant at Pangkalan Brandan, up to an additional 10% of gas will be produced so that LPG can be extracted from the gas stream.

The Kambuna gas will be used for power generation to supply electricity to the city of Medan, North Sumatra and for industrial uses. The existing gas sales agreements with PLN, the Indonesian state electricity company, and Pertiwi Nusantara equate to an average price of approximately US$5.90 per thousand standard cubic feet, escalated at 3% per annum. The blended price for Kambuna condensate will be set at the Katapa Arbei Indonesian Crude Price, which has historically traded at a slight premium to North Sea Brent Crude.

As the productive capacity of the three production wells has been demonstrated to be comfortably in excess of 100 MMscfd and with capacity in the pipeline and processing infrastructure for additional gas supply, Serica and field operator Salamander Energy plc intend to market additional quantities of gas following receipt of regulatory approval to do so.

Serica CEO Paul Ellis said:
“It has taken a lot of hard work to reach first production from the Kambuna field and I congratulate the staff of both Serica and Salamander for their achievement, both companies having operated the field through separate stages of its development. For Serica it is particularly welcome, as this will be the first time that we will have significant production revenue to report. I am also confident that we shall be able to market additional quantities of gas once the field performance has been demonstrated, since there is a strong demand for gas in north Sumatra.”

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