Gas Sales Agreement Heads signed: Mako Gas Field

Coro Energy PLC

12 September 2023

 

12 September 2023

Coro Energy Plc

("Coro" or the "Company")

Gas Sales Agreement Heads signed for the Mako Gas Field

Coro Energy PLC, the South East Asian energy company with a natural gas and clean energy portfolio, announces that the operator of the Duyung PSC has signed the non-binding Term Sheet with Sembcorp Gas Pte. Ltd. for a long-term gas sales agreement for the Mako gas field. Critically, the Term Sheet has been endorsed by the Indonesian petroleum upstream regulator (SKK Migas).

The Mako gas field was discovered in 2016, and since that time the resource has been delineated through successful appraisal drilling. It received formal approval from the Government of Indonesia for the revised Plan of Development in late 2022. Coro has a 15% participating interest in the Duyung PSC.

The Term Sheet relates to the sale of Mako gas from start of production until 2037 for a total sales gas volume (100%) of c 293 Bcf with the potential to increase to c 392 Bcf. Gas sales will be priced against Brent oil.

Further details of the gas sales agreement will be released to the market once the agreement is executed.

The parties will now focus on finalising a definitive gas sales agreement.

An extract of the Operator announcement has been included below.

Change of Name of Nominated Adviser

The Company also announces that its Nominated Adviser has changed its name to Cavendish Securities plc following completion of its own corporate merger.

James Parsons, Chairman, commented:

"I am delighted to have now secured the GSA Heads at the Duyung PSC, approved by the buyer and, critically, endorsed by the Indonesian authorities.  

This is a critical step in the commercial de-risking of our project, positioning us perfectly for bids from the operator's  farm-out process, which we expect to play out shortly."

For further information please contact:

Coro Energy plc James Parsons, Executive Chairman Ewen Ainsworth, Chief Financial Officer	Via Vigo Consulting Ltd
Cavendish Securities plc (Nominated Adviser) Adrian Hadden Ben Jeynes	Tel: [phone]
Vigo Consulting (IR/PR Advisor) Patrick d'Ancona Finlay Thomson	Tel: [phone]
WH Ireland (Broker) Harry Ansell Katy Mitchell	Tel: [phone]
Gneiss Energy Limited (Financial Advisor) Jon Fitzpatrick Doug Rycroft	Tel: [phone]

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the EU Market Abuse Regulation 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

The extract of the Operators announcement is as follows:

Subsequent to the end of the reporting period, Conrad signed a non-binding Term Sheet with SembCorp Gas Pte Ltd. (a Singapore based major gas and generating utility) which outlines the core terms and framework as the basis for negotiating of a final binding Gas Sales Agreement. The parties to the Term Sheet have also agreed to negotiate, in good faith, a definitive Gas Sales Agreement by 31st December 2023. This date aligns with our targeted date for a Final Investment Decision for the Mako Project.

The Term Sheet and the framework of included terms have now been endorsed by the Indonesian petroleum upstream regulator (SKK Migas). The final Gas Sales Agreement will be subject to approval by the Minister of Energy and Mineral Resources, SKK Migas, any other requisite government approvals and other customary conditions precedent.

The key terms of the Term Sheet relate to the sale of Mako gas from start of production to the end of the Duyung PSC in 2037, for a total sales gas volume of 293 Tbtu (c 293 Bcf) with potential increase to 392 Tbtu (c 392 Bcf) i.e. 71% and up to 95% of the field's estimated 2C Contingent Resources of 413 Bcf (100%) as assessed by GaffneyCline Associates (26 August 2022). Gas sales will be priced against Brent oil.

Conrad will keep the market informed on the outcome of the Term Sheet as and when it is in a position to do so.

Conrad holds a 76.5% operated interest in the Duyung PSC via its wholly owned subsidiary, West Natuna Exploration Limited.

Duyung is located in the Riau Islands Province, Indonesian waters in the West Natuna area, approximately 100 kilometres to the north of Matak Island and about 400 kilometres northeast of Singapore.

GaffneyCline Associates conducted an independent assessment of the field and estimates that Mako contains gross field 2C Contingent Resources of 413 Bcf (100%), with 215 Bcf of 2C Contingent Resources attributable to Conrad under its Participating Interest in Duyung (26 August 2022) as outlined in the Company's IPO prospectus dated 9 September 2022.

Gas sales agreement negotiations have been a focus of the Board and management of Conrad with tripartite engagements held between Conrad, a major gas buyer, and SKK Migas. The negotiation of key terms is now expected to be finalised during the Q3 CY2023. The continued GSA negotiations will allow the Company to take advantage of an improved and favourable pricing environment given strong worldwide gas demand. Discussions with an Indonesian buyer are also ongoing and depending on the availability of a physical connection to the domestic market, a portion of the gas may be sold to Indonesia or the entire quantity may be exported.

Front end engineering design ("FEED") studies were initiated during Q4 CY2022. Three separate FEED studies are being progressed for: the mobile offshore production unit ("MOPU") processing facilities; the subsea umbilicals, risers and flowlines ("SURF"); and, for the conductor support frame ("CSF"). The MOPU processing and the SURF FEEDs have been completed. The CSF FEED will conclude in Q3 CY2023. The results of this work are now being integrated and discussed with SKK Migas.

A geophysical pipeline route survey and a remote operated vehicle survey of the production manifold in the adjacent Kakap PSC (through which Conrad intends to export the Mako gas to the West Natuna Transportation System) have been completed without incident. A geotechnical survey of the MOPU location and potential well locations is scheduled over the next few months. Project optimisation discussions (e.g. precise placement of wells and facilities in light of the geophysical and geotechnical surveys) are ongoing with SKK Migas. The procurement process for all major project equipment and services contracts commenced in Q2 CY2023.

Acquisition of environmental approvals for development is ongoing. The Government of Indonesia requires environmental permits for drilling or construction activities within the country. Included within the required permits is the project Environmental Impact Assessment (termed "AMDAL" in Indonesia). The Mako project AMDAL has been submitted to the government for review with approval expected before the end of the year.

Updated capital and operating costs for the Mako Gas Field development project will be provided following on-going engineering work and ongoing procurement activities.

A farm-down process for the divestment of a portion of Conrad's interest in the Duyung PSC is ongoing with bids expected to be received soon. Conrad has engaged a global investment bank with a proven track record in similar transactions to lead the farm-down process.

Conrad had previously commissioned three studies for the Mako project namely, a climate change risk assessment a biodiversity & critical habitat risk assessment and a human rights impact assessment. The former two studies have been completed (with no significant impactful findings) and the latter study will be finalised in early 3Q CY2023. The studies aim to provide independent adjuncts to the project environmental approval process required by Indonesian regulations (described above).

 

END