Triangle Energy (ASX:TEG) has been granted a further six months to continue development work and secure a renewal of its Pase production sharing contract in Aceh, North Sumatra.
The company is planning to reperforate its producing A2 well using conventional perforating with propellant stimulation technology after an earlier attempt in the upper reservoir and an organic acid wash failed to establish natural oil and gas flow.
Triangle is hoping to establish flow rates in line with the observed production of about 20 million cubic feet of gas per day achieved in the original drill stem test.
It is also considering the same process for the A1 well after reperforation of its upper reservoir failed to improve existing production.
Triangle produced 233.39 million cubic feet of gas during the December 2011 quarter.
Other work planned for late this year includes shooting new seismic and drilling further wells.
The company had lodged an application to renew the 922 square kilometre PSC, which was originally due to expire on 23 February 2012, in February 2010.
Indonesian upstream oil and gas regulator BPMIGAS extended on 17 February, Triangle’s PSC for a further 6 months while a decision is made on the renewal.
Triangle said it continued to work closely with the Indonesian Government to finalise a working agreement.
It had previously said that BPMIGAS supported Triangle’s renewal bid and that Indonesian state oil company Pertamina had confirmed it was not interested in acquiring the PSC.
Triangle is well funded to continue its work in Pase with US$7.5 million (A$7 million) in cash at the end of 2011 and having secured a deal to raise US$10 million with Standard Chartered Private Equity (Singapore).
The first tranche of US$3.5 million in convertible notes has been issued to Standard Chartered while the second tranche of US$6.5 million is subject to shareholder and FIRB approval as well as the renewal of the Pase PSC.
The notes mature in 3 years and are convertible into ordinary shares at A$0.03 each, a 58% premium over Triangle’s current share price. The notes have a coupon rate of 8% per annum.