Lemang PSC includes the Akatara gas field that was previously developed as an oil producing asset
Singapore-based oil and gas production company, Jadestone Energy has agreed to acquire an operated 90% stake in the Lemang production sharing contract (PSC) in Indonesia.
Jadestone has signed an agreement with Mandala Energy Lemang to acquire the asset for a total initial headline cash consideration of $12m.
Located onshore Sumatra, Indonesia, Lemang PSC includes the Akatara gas field that was previously developed as an oil producing asset and has an estimate gross undeveloped wet gas of about 115 billion standard cubic feet (bscf).
The 90% stake in the project is equivalent to unrisked 2C resources of 55.2 bscf sales gas, 2.2 mm bbls of condensate, and 5.8 mm boe of liquid petroleum gas.
PT Hexindo Gemilang Jaya will hold the remaining 10% stake in the PSC. The local government has a back-in right under the PSC, for up to a 10% working interest, at the time of development sanction.
Lemang PSC substantially de-risked with 11 drilled wells
With 11 wells drilled into the structure along with three years of oil production history, the Lemang PSC is said to have been substantially de-risked.
After hitting its economic limit for oil production, the field ceased production in December 2019.
Jadestone said that an additional consideration of $5m is payable to the seller upon first gas.
Additionally, further contingent payments of up to $26.7m may be triggered in the event that certain upside outcomes occur.
The firm will use its cash resources and certain subsequent contingent payments to pay for the deal.
Subject to customary governmental consents, the transaction is expected to be completed in the first quarter of 2021.
In November last year, Jadestone Energy executed a sale and purchase agreement (SPA) with OMV New Zealand, a subsidiary of OMV, to acquire an operated 69% stake in the Maari Project in shallow-water offshore New Zealand.