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MEO firms up hold over South Madura, aims to shoot seismic to upgrade leads

Published: 02:03 19 Jun 2012 BST

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MEO Australia (ASX: MEO) has finalised its interest over 90% of the onshore South Madura production sharing contract, putting it in a strong position when it is ready to find a farm-in partner.

Indonesia’s Director General of Oil and Gas approved the transfer of the 60% operating stake from AED South Madura BV, whose parent company AED Oil went into administration in the second half of 2011, to MEO.

This concludes the transaction that was announced on December 28, 2011.

MEO is seeking regulatory approval for an amended work program, following which it plans to shoot seismic to upgrade several leads to prospect status.

It will then start the process of finding a farm-in partner.

“We are very pleased to have obtained the necessary approvals to complete this transaction,” MEO managing director Jürgen Hendrich said.

“MEO has sought an entry to this PSC for several years and now has a 90% participating interest, consistent with our strategy of acquiring high equity positions in prospective permits and adding technical value ahead of seeking a partner to fund drilling.

“We will now work with the regulator to submit a preliminary work program and budget for the 2013 exploration period.”

South Madura

The production sharing contract covers 1586 square kilometres on Madura Island.

It contains a number of near term shallow targets with relatively low drilling costs and could hold deep reservoirs with higher resource potential.

South Madura is located immediately north of Santos’ (ASX: STO) Sampong block, which contains the Oyong Anggur and Jekuk oil and gas fields, and south of the Bukit Tua and Jenggolo oil fields.

The Kurnia-1 well that was drilled on the block in 2007-08, encountered good oil and gas shows in the Kujung reservoir and flowed gas to surface.

However, the test was compromised by a combination of high formation pressure and mechanical problems that resulted in the testing equipment becoming blocked.

 

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