RNS14 Jan 2019 07:09
Andalas Energy and Power Plc
(‘Andalas’ or the ‘Company’)
Update on Bunga Mas PSC
Andalas Energy and Power PLC, is pleased to report that Arcandra Tahar, Deputy Minister of Energy and Mineral Resources (“Deputy Minister�) issued a press release on Friday 11 January 2019, that the Bunga Mas PSC will be one of 6 licences that will be converted to gross split PSC’s by mid-February 2019. As announced on 29 August 2018, Andalas has a conditional agreement to acquire an initial 25% (rising to 49% and then 100%) interest in the Bunga Mas PSC.
The operator of the Bunga Mas PSC applied to convert the PSC to a gross split PSC as part of the process to extend the exploration period, one of the key conditions to completion of Andalas’s acquisition of an interest in the Bunga Mas PSC. Andalas regards the conversion to a gross split PSC as an important and positive step in this process.
The modelling performed by the Company to date indicates that the conversion of the PSC to the gross split PSC is likely to alter the economic profile of a successful development of Bunga Mawar. Importantly, however, it does not alter Andalas’ view that the deal exposes shareholders to significant upside under both the original PSC terms and the gross split PSC terms.
In addition, Andalas believes that the new gross split PSC will provide operating advantages - the Deputy Minister highlighted that the gross split PSC regime was created to make oil and gas licences efficient, uncomplicated, simple and with more secure processes.
Andalas will advise on the terms of the extension at such time as approval is granted by the government. The terms will include, amongst other things, the terms of the extension of the exploration period and the application of any transitional provisions between the old and the new regime.
Simon Gorringe, CEO of Andalas Energy and Power PLC said, “This change in licence terms is in line with the Indonesian government’s intention to have all oil and gas licences structured on a Gross Split basis and although we still do not know the exact terms of the new licence the company has the ability to renegotiate its economic interest with the operator to ensure the project meets our investment criteria.
“This news validates our decision to grant a short extension to the long stop date last month. The announcement by the vice Energy Minister indicates that the PSC will be formally converted in February, during which time we will continue to work with the vendor towards finalising the acquisition.
“We have established a good relationship with the Bunga Mas Operator who wants to close the deal as soon as possible and is willing to work with ADL to ensure that a satisfactory deal can be agreed. I look forward to updating the market as we progress with what continues to be an exciting deal.
“Andalas is paying consideration for the acquisition of Bunga Mas of 19.2 million shares (£177,600 at the closing sha
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