Bukit Energy Awarded Two Unconventional Sumatran PSCs

Daily Oil Bulletin (JuneWarren-Nickle’s Energy Group)

March 26, 2015

Bukit Energy announces the award of two unconventional production sharing contracts in Sumatra, Indonesia.

With these awards, Bukit said it is the leading industry acreage holder for Sumatran unconventional oil and gas rights having three unconventional PSCs covering a total of 1.37 million acres (including the previously announced MNK Kisaran PSC).

The U.S. Energy Information Administration and Cambridge Energy Research Associates have independently estimated Sumatran unconventional risked recoverable resource to be up to seven to 13 billion boe.

The awarded MNK Palmerah PSC comprises the deeper (tight/shale) rights underlying Bukit’s conventional Palmerah Baru PSC. Bukit is the operator of this PSC holding a 69.36 per cent participating interest.

The second awarded PSC is MNK Sakakemang, which is immediately south of the MNK Palmerah PSC, and Bukit is the operator holding a 50 per cent participating interest. The balance of the MNK Sakakemang participating interest is held by Pertamina, the Indonesian National Oil Company.

MNK Sakakemang commences Bukit’s strategic partnership with Pertamina, the largest Sumatran land rights holder.

Securing the MNK Palmerah and Sakakemang PSCs represents the fulfillment of Bukit’s goal to capture the main hydrocarbon source basins for an area where 1.5 billion boe have been discovered to date.

On Feb. 20, the Government of Indonesia approved an unconventional joint study agreement (“JSAU”) for the deep (tight/shale) zones related to Bukit’s Bohorok conventional PSC in North Sumatra. Bukit will be the nominated operator for an MNK Bohorok PSC bid if the JSAU progresses to a direct award bid round, at the option of the Bukit consortium. The most recent gas sales contract in North Sumatra, marketing production into the Bohorok area, has an announced price of $9.44 per mmBtu.

Bukit said it remains confident in the economics of the Sumatran unconventional business due to the increased gasification of the Indonesia-Malaysia-Singapore region, and the resultant high gas prices. Unlike North America, Indonesian gas prices are not expected to decrease with increased supply due to already existing LNG export capacity and pipeline infrastructure connecting Sumatra to Malaysia and Singapore.