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KrisEnergy to sell 30% stake in Andaman II production sharing contract
KRISENERGY said on Tuesday that it has accepted a binding letter of offer from an undisclosed "major international oil and gas company" for the sale of its 30 per cent non-operated working interest in an Andaman II production sharing contract (PSC) in the Malacca Strait, Indonesia.
A PSC is an agreement between one or more investors and the government, which grants corporates rights over an oilfield for a specific period.
The Andaman II PSC meanwhile, is an exploration block over the North Sumatra Basin covering an area of 7,400 square kilometres, the upstream oil and gas firm said in a regulatory update.
The firm’s board felt it was "more prudent" to allocate KrisEnergy’s limited capital to fund near-term development, after considering future exploration cost and risks associated with deepwater activities.
KrisEnergy said the disposal is in line with the group’s risk mitigation and intention to reduce exposure to exploration capital expenditure.
It is also part of its strategy to focus its "limited financial resources" on optimising operations at existing assets in Bangladesh and the Gulf of Thailand, along with the development of the Apsara oilfield in Cambodia block A.
"The disposal is in the company’s ordinary course of business and does not change the company’s risk profile," KrisEnergy added.
The disposal’s completion is subject to all necessary approvals from the Indonesian government for the assignment of the working interest, and satisfactory due diligence by the purchaser.
The disposal terms indicated in the letter of offer are also subject to certain assumptions and the execution and delivery of a definitive sale and purchase agreement.
The long stop date for the disposal is March 31, 2020, with the proceeds of the sale payable upon completion.
Shares of KrisEnergy have been suspended since Aug 14.