Press releases

Kerendan Gas Sales & Purchase Agreement

28 June 2011

Salamander Energy announces that its wholly-owned subsidiary Salamander Energy (Bangkanai) Limited has today signed a Gas Sales and Purchase Agreement (“GSPA”) with PT PLN (Persero), the Indonesian State Power Company, for the sale of gas from the Kerendan gas field, Bangkanai PSC, onshore Kalimantan. The gas will be used for power generation locally. Salamander has 69% operated interest in the Bangkanai PSC.

Key terms of the Kerendan GSPA include:

  • A gas price of $4.79/MMBtu ($5.08/Mscf) with 3% escalation per 3 years
  • A daily contract quantity of 16.2 BBtu per day, rising to 20.3 BBtu per day by December 31, 2011
  • Delivery point at a metering station within a 3 km radius of the Kerendan field production facility
  • Contract period of 20 years
  • Total contract volume 130 trillion Btu

As a result of commercialising this volume of gas, Salamander will book a net 16.5 MMboe of proved reserves from the Kerendan field, comprising 84 Bcf (with a conversion factor of 5.5 Bcf per MMboe) and 1.25 million barrels of condensate. The Kerendan field has a further gross 162 Bcf of gas resource (111 Bcf net to Salamander) which is yet to be commercialised.

The development of the field includes the drilling of at least three production wells and the engineering design, procurement and construction of gas processing facilities and associated pipelines, with gas deliveries to be available by mid-2013.

A two well programme will commence in the third quarter 2011 with the drilling of the Sungai Lahei well (“SL-1”). SL-1 is planned to drill a complete section of the Oligocene-age Berai carbonates, the productive reservoir in the Kerendan field, and to be deepened to provide stratigraphic information on the Eocene-age Tanjung clastic formation underlying the Kerendan field. It will then be completed as a Kerendan producer.

Salamander is planning to follow SL-1 with a test of an additional prospect in the Bangkanai PSC. The MB Century 28 land rig is under contract for the drilling of the SL-1 well and is currently undergoing routine maintenance before mobilising to the well location where site construction is well advanced.

Salamander Chief Executive James Menzies commented:

“Salamander took operatorship of the Bangkanai PSC in December last year and has lost no time in driving the project forward. We have added significant value in a very short period of time through the signing of the gas sales agreement at a price in excess of $5 per Mcf and the booking of an additional 16.5 MMboe of proven reserves. With further gas resources already identified in the Kerendan field and exploration drilling to follow in the second half of the year, we see a great opportunity to build a niche position supplying Kalimantan’s growing domestic gas market.”

Salamander Energy 020 7960 1580
James Menzies, Chief Executive Officer  
Geoff Callow, Head of Corporate Affairs  
Brunswick Group LLP 020 7404 5959
Patrick Handley  
Fiona Micallef-Eynaud  

About Salamander

Salamander is an Asia focussed, independent, FTSE 250, upstream oil and gas exploration and production company. Salamander has a balanced portfolio of production, development and exploration assets with interests located in Indonesia, Thailand, Vietnam and Lao PDR.