Conrad will operate and hold a 100% participating interest in both blocks.
Earlier this week, the Ministry of Energy and Mines of Indonesia announced that Conrad had submitted winning bids for both blocks. Conrad has 60 days from the announcement to discuss and formally accept the offers with the relevant authorities. The total committed work program for each PSC is $15 million and includes geological studies for 2023, 500 sq km of 3D seismic acquisition for 2024 and the drilling of a well for 2025.
While the initial costs will be funded through the company’s recent public listing on the Australian Securities Exchange, most of the funding will come from farm-in partners as the PSCs are progressed and the commencement of cash flow from the Mako gas field.
The PSCs contain hydrocarbon potential around the existing shallow-water gas discoveries close to shore and in the underexplored deepwater portions of the blocks. The water depths in the two working areas vary between 5 m and 1,500 m, with the existing discoveries located in water depths of less than 100 m. These discoveries were made in the 1970s, at a time of low gas prices and little regional demand, the company said. These shallow-water discoveries are in geological formations known as “pinnacle reefs” where the company has already identified another seven leads to mature for future drilling.
Historical drilling success rates in these shallow-water areas has been about 35%, using older 2D seismic data. Conrad intends to acquire 3D seismic data in the most prospective areas, where it expects to achieve higher exploratory success rates, further de-risking the exploration potential.
The ONWA block comprises total acreage of 9,182 sq km and contains the Meulaboh-1 and Meulaboh East-1 gas discovery wells. The OSWA block covers 10,700 sq km and contains the Singkel-1 gas accumulation. These discoveries have all been successfully flow tested at commercial rates and are close to shore, offering near-term, low-cost commercialization opportunities.
Conrad is in the process of obtaining a third-party competent persons report for the known gas discoveries in both blocks. Conrad said it intends to initiate independent prospectivity reviews of the deepwater exploration potential of the PSCs.