7 Oct 2020 07:00
7 October 2020
Advance Energy plc
("Advance Energy" or the "Company")
Termination of Betun-Selo KSO Agreement
Advance Energy plc (AIM:ADV), the energy company seeking growth through acquisition or farm-in to non-operated interests in discovered upstream projects, advises that, further to the operations update provided on 14 September 2020, the Company has now entered into a Deed of Termination and Release with PT Petroenim Betun-Selo and PT Celebes Artha Ventura in relation to the Operating Services & Option Agreement for production on the Betun-Selo KSO field in Sumatra, Indonesia ("Service Agreement").
In its previous form of Andalas Energy and Power plc, the Company entered into the Service Agreement in June 2019 and subsequently met all its obligations thereunder. The disappointing production performance of the field means that the Company has not realised any incremental production from the Service Agreement beyond April 2020.
The Company views the Betun-Selo KSO as non-core and not in line with the Company's forward strategy, and accordingly the Company entered into discussions with PT Petroenim Betun-Selo and PT Celebes Artha Ventura in September 2020, which has culminated in the parties entering into the Deed of Termination and Release.
The Company continues to progress a number of new venture opportunities and, whilst it is yet to agree commercial terms in respect of such opportunities, the Board is encouraged by its initial due diligence and the multiple, positive funding discussions it has initiated. This is in line with its focus on leveraging the deep industry experience and network of the management team to identify and unlock hidden value in discovered upstream projects that meet with the Company's required acquisition or farm-in criteria, and build a portfolio of non-operated positions generating at least 20,000 barrels of oil equivalent per day net production by mid-decade, or earlier.
The Betun-Selo KSO asset was capitalised on the Company's balance sheet at US$604,000 as at 31 October 2019, the last balance sheet date. The Company expects to fully impair this asset at the next balance sheet reporting date.
Leslie Peterkin, CEO of Advance Energy, commented:
"This Agreement draws another line under the legacy business and helps us move forward with our stated strategy with more focus. The disappointing performance of this asset helps emphasise our strategy in terms of highlighting the importance of asset due diligence, technical insight and partner alignment. The assets we are currently screening have a very different profile in terms of risk factors, cash flow potential, and upside and would deliver the planned step change in our company if completed. We are encouraged by our ongoing discussions and remain confident in our ability to bring shareholders a compelling transaction in the near future."
Enquiries:
Buchanan (Public Relations)
Ben Romney / Kelsey Traynor +44 (0)20 7466 5000
Beaumont Cornish Limited (Nominated Adviser)
Roland Cornish / James Biddle +44 (0) 20 7628 3396
Novum Securities Limited (Joint Broker)
Colin Rowbury +44 (0)20 7399 9427
Optiva Securities Limited (Joint Broker)
Christian Dennis +44 (0)20 3411 1881
For further information, please visit www.advanceplc.com and @advanceplc on Twitter
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This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 ("MAR").