Criterium Energy Ltd acquires 42.5% interest in the Bulu Production Sharing Contract offshore East Java Indonesia
The acquisition of a 42.5% interest in the Bulu Production Sharing Contract ("Bulu PSC"), which includes the fully evaluated Lengo gas field offshore East Java Indonesia (the "Acquisition") for a total consideration of US$1.6 MM, has been completed, Criterium Energy Ltd. is happy to report.
Acquisition Highlights
Strategic Market Entry: The Acquisition satisfies Criterium's strategic goal in developing natural gas assets close to strong demand regions and represents a low-risk market entry into its target region of SE Asia.
Huge gas resource: The Lengo Gas Field, which tested 20.6 MMscf/d from the Kujung Carbonate Formation, is located in the Bulu PSC. To support a development plan, the field has undergone an independent assessment in accordance with the Petroleum Resources Management System. In Q1 2023, Criterium will order a COGEH-compliant report.
The Lengo Gas Field's Plan of Development was approved by the Indonesian government in 2014, with the first gas expected to be produced in 2026 or 2027 and sales gas ranging from 60 to 80 MMscf/d gross (or 25 to 30 MMscf/d net Criteria).
The Bulu PSC is situated 60 kilometres offshore from the substantial industrial complex at Tuban and has access to various end-users in Central and East Java
The Bulu PSC partners have signed a Heads of Agreement ("HOA") for long-term gas offtake, which is anticipated to advance to a legally binding Gas Sales Agreement in 2023. Favorable gas prices are anticipated to fall between US$6 and US$8/MMbtu.
Collaboration Joint Venture: By lowering capital and operational costs, raising sales gas, reducing environmental impacts, and assessing the possibility of carbon sequestration, Criterium plans to collaborate with the Bulu PSC Joint Venture Partners to improve the project's economics and risk profile.
Enhance total shareholder return by optimising Criterium's net carrying interest in the project through its interactions with Joint Venture Partners and through M&A activity.
Attractive economics and cost pool: By speeding the return of capital, a US$100 MM gross cost recovery pool improves project economics.
Favorable terms for the acquisition: Buying the Bulu PSC for US$0.04/2C boe, 90% less than the market average for the previous three years.
Market Tailwinds: The recent IPO and equity financing on the ASX by Conrad Asia for a comparable gas development in Indonesia demonstrates the strong market support for sizable gas initiatives in SE Asia.
Robin Auld, Chief Executive Officer, commented
"The acquisition of an interest in the Bulu PSC provides Criterium a strong foundation from which to execute our SE Asia growth and income business model. This fully appraised gas resource together with encouraging progress made on the Gas Sales Agreement sets the stage for value accretion in the short and long term. We are enthusiastic to be joining the existing partners in the Bulu PSC Joint Venture. Together, we intend to augment the development plan and reduce the environmental impact to deliver a project that can help Indonesia sustainably reach its domestic production target of 12 bcf/d by 20304.
Criterium will seek to assemble a portfolio of complimentary assets to optimize its working interest in the Bulu PSC and maximize total shareholder return."