Press releases

Introduction of Strategic Partner in Greater Kerendan Area

11 March 2013

Salamander Energy plc announces that it has reached agreement to farm-out a 30% interest in the Bangkanai Production Sharing Contract (“PSC”), Central Kalimantan, Indonesia to PT. Saka Energi Indonesia (“Saka”). On completion of the transaction, and the Medco swap announced earlier today, Salamander will have a 70% operated interest in the Bangkanai PSC, which contains the Kerendan field development and surrounding exploration.

Transaction Summary

Bangkanai PSC

Salamander will farm out a 30% interest in the Bangkanai PSC to Saka in exchange for:

    $27 million cash
    A carry on development costs for the Kerendan field of up to $30 million
    2:1 promote on the drilling of the West Kerendan exploration well
    1.25:1 promote on the drilling of the subsequent exploration or appraisal well

The transaction will have an effective date of 1st January 2013.

Joint Study Areas (“JSAs”)

Salamander holds 100% interests in both the North East Bangkanai JSA and West Bangkanai JSA, both located in the vicinity of the Bangkanai PSC. Salamander has submitted bids for the two areas in the current Indonesian licensing round.

Should these areas be awarded to Salamander as PSCs, under the terms of the agreement, Saka will have the option to earn a 30% participating interest in each block through the funding of the initial $5 million of work programme for each licence.

Kerendan Field Development

The Bangkanai PSC is located onshore in central Kalimantan, Indonesia and contains the Kerendan gas field which is undergoing development. To date, 122.6 Bcf has been committed for sale under a Gas Sales Agreement with PLN the Indonesian state power company. A further 160 Bcf of contingent resource is identified in the field, providing potential for commercialisation of additional gas volumes.  The field is expected to be on-stream in 2014.

Exploration Potential

A number of prospects and leads have been mapped in the Bangkanai PSC. The West Kerendan prospect comprising the Oligocene-age Berai carbonate and underlying Eocene Tanjung (“Sungai Lahei”) clastic targets is due to be drilled in Q2 2013 using the Drillco-1 land rig following the completion of the Kerendan development drilling programme.

The West Kerendan prospect is an Oligocene-age reefal carbonate and is analogous to the Kerendan gas field. It has a gross mean prospective resource potential of 335 Bcf and a 45% chance of success. The underlying Sungai Lahei prospect is an Eocene-age sandstone target with a gross mean prospective resource potential of 580 Bcf and an 18% chance of success.

Both prospects will be tested by the West Kerendan exploration well, to be drilled to 4,000 metres depth with estimated to cost circa $20 million.

The commercialisation of any substantial discovery in the Greater Kerendan area would be focussed on the East Kalimantan gas market.

Commenting on the transaction, James Menzies, CEO of Salamander said:

"We are very pleased to announce two transactions today that see us consolidate the remaining minority interest in the Bangkanai PSC and then welcome a strategic partner into one of our core areas.

Although a new entrant to the upstream E&P sector, Saka bring clear expertise in the transportation and distribution of gas in the region. On the back of exploration success, they will prove to be a valuable partner in looking to tap new markets for gas. We are now looking forward to completing the Kerendan development drilling campaign and moving on to the next phase of exploration in the basin."




Salamander Energy
+ 44 (0)20 7432 2680
James Menzies, Chief Executive Officer     
Geoff Callow, Head of Corporate Affairs     
Brunswick Group     
+44 (0)20 7404 5959
Patrick Handley     
Elizabeth Adams          


About Saka

PT Saka Energi Indonesia is a Jakarta-based oil and gas exploration and development company.


About Salamander

Salamander Energy is an independent upstream oil and gas exploration and production company listed on the main market of the London Stock Exchange (Ticker: SMDR) and is a constituent of the FTSE 250 index. The Group is focused on growth assets in and around three core areas: Greater Bualuang, Gulf of Thailand; North Kutei, Indonesia; and Greater Kerendan, Indonesia. In each of these areas the Group has a material, operated position and a detailed understanding of the petroleum systems of the basin.