AWE Increases Estimate of Recoverable Oil for AAL, Indonesia

AWE Limited has increased its estimate of recoverable oil for the Ande Ande Lumut (AAL) K Sand development by 33% to 101 million barrels of oil (including upgrading what were previously considered Contingent Resources to Gross 2P Reserves), following an independent review and certification by Perth – based RPS Energy Services Pty Ltd (‘RPS”).

An additional 35 million barrels of gross recoverable oil in the underlying G Sand reservoir has also been classified as 2C Contingent Resources (AWE will need to prepare and submit a formal plan of development for normal regulatory approvals before these additional Contingent Resources can be upgraded and reclassified as 2P Reserves ). As a result of these increases and reclassification, AWE reports that it is booking 50 mmbbls of Net 2P Reserves for AAL, which represent the company’s Net Entitlement to Reserves under the terms of the Northwest Natuna PSC (“PSC”).

This addition increases AWE’s total corporate 2 P Reserves (as at 31 December 2012) by 83% to 110 million barrels of oil equivalent (“mmBOE”).

The RPS review and certification incorporated the substantial subsurface and project optimisation work undertaken by AWE since it acquired the AAL asset in February 2012. This work includes the results of seismic reprocessing and improvements in depth mapping as well as a third party study of petrophysics, providing a more robust interpretation of the oil reservoir. These studies have provided the basis for enhancement of the K Sand reservoir model and the ensuing optimisation of the development drilling plan and improved recovery efficiency for production operations.

In conjunction with a number of other independent studies associated with the AAL project, AWE also commissioned a marketing report that has concluded the AAL crude oil price should benchmark at or around Brent crude prices in the current Asian market.

AWE’s Managing Director, Bruce Clement, said that the company had made considerable progress in better definition of the reservoir and hydrocarbon characteristics of the AAL oil field, resulting in significant optimization of the development plan. The results of this work are reflected in the independent review and certification by RPS.

“This is an outstanding result for AWE and for the Government of Indonesia. When AWE acquired this asset in early 2012, we recognised the significant potential of the K Sand and we were also confident that the underlying G Sand would yield development potential.

“The AAL Project is now a significant oil field development. To put this into perspective, the AAL development is comparable in size with the largest oil field developments in Australia and New Zealand since 2000.

“The AAL Project has increased AWE’s total corporate 2P Reserves to 110 mmBOE and will be the foundation for a period of sustained growth for the Company over the next decade. The AAL oil field together with the additional exploration prospectivity we have identified within the Northwest Natuna PSC represents an exciting opportunity for AWE.

“The independent review and certification by RPS is another positive milestone for AWE as we progress the development of the AAL project. These new results will now be included as part of the ongoing co – operative discussions with the independent regulator, SKK Migas, which are aimed at delivering an optimised plan of development for AAL and maximising the potential of this valuable asset.”

Clement said: “AWE is finalising preparations for the farm – out of up to 50% of AAL. The farm – out process is gaining momentum and we are receiving strong levels of interest from companies wishing to participate in this exciting growth project.”

He added, “AWE is on track for completion of the farm – out in the third quarter of 2013, targeting a final investment decision on the field development before the end of the year.”

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Press Release, May 20, 2013