Andalas Energy and Power plc (formerly CEB Resources) announced that it has signed a non-binding heads of agreement to farm-in to the Technical Assistance Contract (TAC) covering the Tuba Obi East oil and gas concession (TOE) (the concession) in Jambi province, Sumatra, Indonesia.
The proposed transaction would constitute a reverse takeover within the meaning of the AIM Rules for Companies.
Highlights
- Heads of agreement signed to acquire 30 percent working interest in TOE TAC via a farm-in
- TOE is a 'beach head' for Andalas into the Indonesian gas sector
- Any future gas production from the concession may support either:
- Gas export with the project located close to a major export route; or
- Gas-to-power being located in an area where a significant shortfall in energy generation exists
Farm-in via execution of a $1.075 million work program. Bonus payment of $500,000 on renewal of the concession
- Work program to be jointly operated by Andalas and includes technical studies and the drilling and testing of one appraisal well which would be put into production on success
- Subject to well results, further development studies will be undertaken
- Andalas' gas and power study shows strong market for gas at high prices
- Transaction is a reverse takeover and the Company is preparing an admission document seeking shareholder approval which it will publish in due course
Andalas CEO, David Whitby, said, "A farm in to the TOE concession in Indonesia will give us a 'beach head' to build a significant gas business in the country. This is the result of many months' work during 2015 by our team and our extensive network of Indonesian gas and power industry experts. That work culminated in a comprehensive study of the Indonesian gas and power sector, from reservoir sand-face to gas burner tip, which I believe gives us a significant competitive advantage in realizing the value of TOE and future blocks currently under evaluation.
"TOE is ideally located adjacent to the major Sumatran gas pipeline to Duri and Singapore, and close to the provincial capital city of Jambi which is in critical need of power generation. We see great potential to add further value by expanding the concession to capture additional gas discoveries just outside the acreage. In addition to providing Andalas with a clearly defined road map, today's agreement also marks the beginning of the process for our shares to be readmitted to trading on AIM and I look forward to providing further updates on our progress.
"ADL has assembled a top tier Indonesian drilling team that has commenced the well planning process to fast-track the spudding of our first well which will be a target following our readmission to AIM".
