Major land acquisition in JavaPAN ORIENT ANNOUNCES FURTHER INDONESIAN ACQUISITION
Pan Orient Energy Corp. has purchased, through a series of transactions, an operated 69-per-cent working interest in the 4,440-square-kilometre Citarum production sharing contract (PSC), located onshore West Java,Indonesia. Total consideration in the transaction is $7-million (U.S.)in cash and $4-million (U.S.) in Pan Orient common stock with the vendor, Ranhill Berhad and its related group of companies, retaining an11-per-cent carried working interest through to first commercial oil or gas production. This transaction follows the acquisition of a90-per-cent working interest in both the Batu Gajah PSC, south Sumatra,and the Pemai Taluk joint study agreement that were announced in Stockwatch on May 12, 2008.
Citarum PSC
The Citarum PSC was awarded to Ranhill Berhad by way of its exercise of right of first refusal, of another parties high bid, in the July, 2005, Indonesian licensing round. Of note, Pan Orient had bid unsuccessfully in 2005 on this same PSC. Citarum lies approximately 25 kilometres south of the Indonesian capital of Jakarta and directly adjacent to the numerous producing oil and gas fields of the prolific West Java basin. The large Pasarjadi gas field (256 billion cubic feet) and Subang gas field (779billion cubic feet) are located seven kilometres north and six kilometres east of the concession boundary, respectively. Within a24-kilometre distance north of the concession are over 37 oil and gas fields that include the Jatibarang field with over 102 million barrels of cumulative oil production to date and 58.9 million barrels of recoverable oil remaining. Oil and gas infrastructure in the region of the PSC is extensive and local gas markets are robust and growing.
The Citarum PSC is located along the southern edge of the undeformed portion of the West Java basin and extends south into the entirely unexplored West Java fold belt that contains a large number of surface oil gas seeps. Seismic data coverage is sparse with approximately 500kilometres of 2-D data covering approximately 10 per cent of the PSC area. Only one well has been drilled to date within the concession boundary, encountering a 590-metre-thick Batu Raja limestone reef with cavernous porosity zones that resulted in the loss of over 120,000barrels of drilling fluid. The well has been cased and suspended with the main Batu Raja objective untested within structural closure, across the cavernous porosity zone.
Remaining commitments over the first exploration period include three wells and 750 kilometres of 2-Dseismic, totalling approximately $22.75-million (U.S.) gross($18.2-million (U.S.) net).
Indonesian strategy
Pan Orient's acquisition of the Citarum PSC, Batu Gajah PSC, Pemai Talukjoint study agreement and the very recent, yet announced, signing of the Kubu JSA in central Sumatra are immediately providing Pan Orient a third, large, highly prospective focus region with a full range of relatively low-cost exploration opportunities that will provide the means for future growth and strategic use of existing cash and future Thailand cash flow. All the acreage satisfies the company's stated objectives of acquiring large, operated onshore acreage positions within proven producing basins that possess: multiple targets,shallow-to-moderate target depths and existing infrastructure. Pan Orient continues to believe, as it has demonstrated in onshore Thailand, that the onshore potential of the South Asia and South East Asia regions has been largely overlooked since the 1970s to 1980s when high oil prices drove the activity levels of the major oil companies.
In the past three weeks, Pan Orient has hired a highly qualified in-country general manager, and has made offers to an exploration manager and seven support staff that will be based in the Indonesian capital of Jakarta.
Contracts have already been awarded for a500-kilometre 2-D seismic program over the Batu Gajah PSC in south Sumatra and a 750-to-800-kilometre 2-D survey over the Citarum PSC in West Java. Permitting is under way and crew mobilization for both seismic surveys is anticipated in the September/October, 2008, time period. Multi well drilling programs are anticipated to commence in2009, the exact timing being subject to partner and government of Indonesia approval.