Conrad Asia Energy (ASX:CRD), a company which listed on the ASX in October last year, on Friday confirmed its receipt of a 100% participating interest in two oil and gas blocks offshore Indonesia.
At the time of writing Conrad Asia has a market cap of $125.8m.
Those two blocks are awarded to Conrad Asia Energy through two PSCs, an instrument of Indonesian petroleum resources law. While the company has a 100% participating interest, the Indonesian government still takes a cut.
“Major companies have already expressed an interest to review our data,” Conrad Asia Energy boss Miltos Xynogalas said.
Both blocks are offshore the island of Aceh to the northwest and southwest respectively.The company has been working on acquiring the PSCs since 2018.
Existing contingent gas resources attached to the permits, Conrad notes, capture shallower waters. Both PSCs also provide the potential for future deepwater exploration.
The company has commissioned a third party provider to take a look at those resources and make an assessment on the integrity of the data. In other words, management is taking it with a grain of salt.
That hasn’t stopped the company from noting there is potential for volumes as high as the trillion-cubic-feet range.
That potential is in the deepwater parts of the PSCs. The deeper a target is underwater, the more the chance of success drops for an oil and gas well.
CEO Miltos Xynogalas pointed to deeper projects elsewhere in his comments on Friday.
“The most prospective leads are in 1,000 metres of water, which by global standards is not deep,” he said.
“We are delighted to have been awarded these PSCs, and to have matured the blocks from when we first started to evaluate them some four years ago. These blocks are consistent with our company strategy of being focussed on gas in offshore locations within Asia.”
While that may sound like a downside, there are reasons to keep an eye on Conrad Asia Energy’s newly acquired plays.
Gas discoveries were made in waters covered by the permits in the 1970s with early stage proof of concept works already completed.
Of significant note from a capex point of view, historical gas flow testing activities have already been conducted, with “potentially commercial rates” logged.
The results of that work in the 1970s included:
270ft gas column in well Singkil-1 flowed a maximum rate of 10 million standard cubic feet per day (mmscfd)
90ft gas column in Meulaboh-1 flowed a max rate of 6.7mmscfd
60ft gas column in Keudepasi-1 flowed a max rate of 5.34mmscfd
30ft gas column in Meulaboh East-2 flowed a max rate of 7.99mmscfd
The reason they were never developed, Conrad says, was due to the relatively undeveloped Indonesian economy at the time.
It will remain to be seen by the company’s geotechnical team if the wells have held up over that timeframe.
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