Empyrean Energy PLC (AIM:EME) said it could sell off its 8.5% holding in Mako, the largest undeveloped and fully appraised gas field in the West Natuna Basin on the northern tip of Indonesia, if the field's operator, Conrad Asia Energy Ltd, arranges a farm-down process.
Empyrean noted that in its latest quarterly report, Conrad provided an update on the Mako gas field development within the Duyung Production Sharing Contract (PSC), highlighting that the negotiation of key terms of a Mako gas sales agreement (GSA) between a Singaporean buyer and the Indonesian regulator (SKKMigas) is expected to be finalized during the second quarter.
Conrad said the continued negotiations have allowed it to take advantage of an improved and favourable pricing environment, given strong worldwide gas demand and low supply, and it has engaged a global investment bank to lead a farm-down process for the divestment of a portion of its interest in the Duyung PSC. Conrad holds a 76.5% interest in the Duyung PSC, with the remaining 15% interest in the Duyung PSC held by Coro Energy PLC.
Bids are expected to be received during the second quarter and the industry response to date has been encouraging, Conrad added.
Empyrean said it will participate pro-rata in the farm-down process through certain drag-along/tag-along clauses that exist in the Duyung Joint Operating Agreement.
Empyrean also said it has communicated to Conrad and the global investment bank that it will also entertain bids for its entire 8.5% interest.
In a statement, Empyrean CEO Tom Kelly commented: "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."
He addded: "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."