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Empyrean expects Mako gas sales deal to complete in second quarter

2nd May 2023 12:16

(Alliance News) - Empyrean Energy PLC on Tuesday said the key terms of the negotiations towards agreeing a sales deal for the Mako gas field development in Indonesia are expected to be finalised during the second quarter of 2023.

The oil and gas development company, which has interests in China, Indonesia and the US, holds an 8.5% interest in the Duyung production sharing contract, of which the Mako gas field is included within.

It said the key terms of a deal looked likely to be completed between an unnamed Singaporean buyer and the Indonesian regulator Special Task Force for Upstream Oil & Gas Business Activities, otherwise known as SKKMigas. Mako is a key strategic gas asset for both countries, according to Empyrean.

Operated by Conrad Asia Energy Ltd, Mako is the largest undeveloped and fully appraised gas field in the West Natuna basin, Empyrean said. It added the continued negotiations has allowed Conrad to take advantage of an improved and favourable pricing environment, given strong worldwide gas demand and low supply.

Conrad holds a 76.5% interest in the Duying PSC, with the remaining held by Coro Energy PLC, excluding Empyrean's 8.5% interest.

Empyrean said Conrad has engaged a global investment bank with a "proven track record in similar transactions" to lead a farm-down process for the divestment of a portion of its interest in the Duyung PSC.

Bids are expected to be received during the second quarter and the industry response to date has been encouraging, Empyrean said, while it will participate pro-rata in Mako's farm-down process, in line with clauses in the Duyung joint operating agreement.

It noted the competent person's report commissioned as part of Conrad's initial public offering in Sydney late last year, which estimated that Mako would generate gas sales of USD2.4 billion net to Conrad's 76.5% interest, equivalent to around USD266 million net to Empyrean's stake.

"Empyrean is pleased to note that GSA negotiations look to be entering a crucial final stage with tripartite meetings being held with Conrad, the Singaporean buyer and SKKMigas," said Empyrean Chief Executive Officer Tom Kelly.

"We welcome the divestment process which we view as the most appropriate way to monetise our interest in Mako and look forward to providing an update as these important negotiations unfold."

Shares in Empyrean were up 15% to 1.15 pence each in London on Tuesday midday, while Coro Energy shares were up 18% to 0.23p.

By Greg Rosenvinge, Alliance News reporter

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