Medco Energi Plans to Drill 28 Exploration Wells, Indonesia

Medco Energi Plans to Drill 28 Exploration Wells

PT Medco Energi Internasional announced its exploration activity for 2013 and 2014 program. MedcoEnergi plans to drill 28 exploration wells in 2013 and 2014. The program consists of 11 wells in Indonesia and 17 wells in international operations, namely Area 47 in Libya, Block 82, 83 and Block 9 Malik in Yemen.

Up to September 2013, MedcoEnergi has completed five wells, for which two wells are in Indonesia (Matang-1 at Block A, Aceh and Bajul Besar-1 at Simenggaris Block, East Kalimantan) and three wells in overseas (Ras Nowmah South-1, Ras Nowmah North-1 and Sueda-1, all are in Block 9 Malik). Currently, one exploration well is being drilled in Indonesia, i.e. Lagan Deep-1A in South Central Sumatra (SCS) Block, South Sumatra. Lagan Deep-1A well will try to prove extensive gas accumulation in Talang Akar formation. The discovery will provide additional gas reserves to supply the industry in South Sumatra area. Aside from Lagan Deep-1A, six wells are currently on the queue for rig spud-in by the remaining of this year, starting with: Salina-1 (Rimau Block), Arung-1 (SCS Block), Pastel (Tarakan Block), all are in Indonesia; and O2 Area 47 (Libya), Al Shamliah and Al Hedba Plateau-1 (both in Yemen).

Since beginning of this year, MedcoEnergi has been actively carrying out the exploration activities both in Indonesia as well as in international. This is in line with the Company’s business strategy to focus on E&P business by means of increasing total reserves through exploration activities. The Company and its partners have allocated 2013 exploration budget for a total of around USD 120 million, and up to July 2013 the realization has reached in the range of USD 50 million. The Company is targeting to gain additional resources approximately at 130 MMBOE (gross) from its exploration activities by the end of 2013.

In Libya, as a compensation of the force majeure situation due to the revolution, on 10 September 2013 the Company successfully obtained an additional period for the Exploration until September 2014. The compensation was granted beside the earlier approval for a two-year Appraisal Period extension to conduct appraisal program for the remaining discoveries in Area 47 alongside what was included in the commerciality approval in December 2011. A successful appraisal program will become the basis of Phase-2 development (as a reminder, the Phase-1 development which is currently in progress is to monetize 300 MMBOE recoverable reserves through a 50,000 BOPD oil plus 50 MMcfd gas production facilities development). The Company has also resumed its operation at field since early this year and is currently conducting one well testing for B2 well that was halted due to the revolution on 17 February 2011.

In Indonesia, MedcoEnergi has successfully made a gas discovery from Matang-1 well in Block A PSC Aceh in May 2013. The testing concluded gas at a rate of 25 MMSCFD with low H2S content and 15% CO2. A follow up plan is carried out until the end of 2013 to define this discovery better.

The exploration and appraisal drilling will continue with 16 more wells in 2014, comprising of six wells in Indonesia and 10 wells overseas. The 2014 total budget for this program is estimated approximately at USD 190 million (gross).

Lukman Mahfoedz, President Director & CEO, commented: “Our strategy focus remains at E&P business, including active exploration to discover more hydrocarbons. Despite the current issues of exploration in Indonesia, particularly in land acquisition and permitting process, our Company steadily continues to do more exploration wells. Next year, the Company starts drilling one exploration well in Senoro-Toili Block to add gas reserves that can be monetized as Liquefied Natural Gas (LNG) or pipelined gas. This is the addition to the planned five wells in other areas in Indonesia. In overseas, we will drill four wells in Area 47 Libya, to repeat our success in finding giant oil discovery there.”

Lukman also added “By focusing on E&P, we are also pursuing divestiture program of our non E&P assets, including ethanol plant and rig services, which is expected for completion by end of this year.”

LNG World News Staff, September 23, 2013; Image: Medco Energi