Pertamina Approves TOE Proof of Concept Work Pr...

10 August 2016

Andalas Energy and Power Plc

(‘Andalas’ or the ‘Company’)

Pertamina Approves TOE Proof of Concept Work Programme

Andalas Energy and Power Plc, the AIM listed Indonesian focused oil and gas exploration company (AIM: ADL), is pleased to advise that Pertamina, Indonesia’s national energy company, has approved the Company’s Tuba Obi East (‘TOE’) proof of concept work programme.  The first step in this programme will be the recompletion of the existing TOE-1 well and production testing of the gas bearing Air Benakat Formation (‘ABF’).

Highlights:

• The TOE-1 production well will be recompleted to the ABF and production testing of the gas will assess deliverability, recoverable volumes, and gas quality at TOE
• The workover reduces Andalas’ upfront costs significantly and expedites the acquisition of key subsurface data.  This new data will enable the optimisation of the future drilling campaign
• Andalas, as the technical operator, is now finalising the recompletion design, tender documents, and mobilisation plans
• Budgetary approval for the programme will be sought from Pertamina in the coming weeks, following which work will commence onsite

Andalas CEO, David Whitby, said: “Over the past two months we have been working closely with Pertamina and our joint venture partner, PT Akar Golindo, to determine the most cost effective way to evaluate the gas in ABF at Tuba Obi East.  Pertamina has recognised the significant potential of the ABF gas, its close proximity to a high demand energy market, and that the proof of concept work programme will quickly and efficiently assess the gas quality, quantity and deliverability. 

“Importantly, the TOE proof of concept programme is in line with Andalas’ strategy to develop a gas-to-power business whilst contributing at the local level to the Government of Indonesia’s objective of decreasing the country’s power shortfall.  The approved programme will also reduce near-term costs by around 60%, allowing us to gather crucial subsurface data weeks earlier whilst simultaneously avoiding any potentially lengthy land acquisition delays.”

Further Information

The TOE field contains three existing wells that intersect the gas bearing ABF.  The recent extensive subsurface technical review has identified the centrally located TOE-1 well as the best candidate for recompletion and testing of the gas in the zone.  As part of the re-entry programme well casing integrity will be assessed; the well will then be recompleted to the shallower ABF; a multi-rate production test will then assess formation productivity; and pressurised gas samples will be collected for laboratory quality testing.

The information gathered by the programme will contribute to better location selection for future delineation and development wells and support gas processing and power plant front-end engineering (FEED) and design studies.  It will also enable the joint venture to complete a gas reserves assessment and commence gas and power sales negotiations.

Tuba Obi East

The Tuba Obi East oil and gas concession area is located in the Jambi province in Sumatra, Indonesia, approximately 30 km north-west of Jambi city.  The concession covers an area of 55 sq km in the South Sumatra basin and is close to the major Sumatra gas pipeline to Duri and Singapore.

Tuba Obi East was discovered in 1986 and to-date three wells have been drilled on the concession, with current production of light, sweet crude oil on an intermittent basis from one well.  All three wells tested near pipeline quality gas in the key South Sumatra hydrocarbon bearing formations, namely, the ABF and TAF.  In April 2016 Gaffney Cline & Associates reported Best Estimate Gross Prospective Resources of 43.7 billion cubic feet (Bcf) of gas in the ABF upper and lower reservoirs within the TOE structure.

Of the six wells that have been drilled through the gas bearing zones (three wells within the concession and a further three just outside), several have flowed gas to surface at rates up to 3 million cubic feet per day (MMscf/d) of gas.  Crucially, the ABF has flowed gas outside the concession at commercial rates, but only limited data from this formation has been gathered within the concession area.

Andalas’ near-term work programme is aimed at gathering data to support rapid development of the TOE gas in conjunction with a small scale, independent power project.

**ENDS**

For further information, please contact:

David Whitby	Andalas Energy and Power Plc	Tel: [phone]
Sarah Wharry Craig Francis	Cantor Fitzgerald Europe (Nominated Adviser and Joint Broker)	Tel: [phone]
Lucy Williams Charles Goodfellow	Peterhouse Corporate Finance Limited (Joint Broker)	Tel: [phone]
Colin Rowbury	Cornhill Capital (Joint Broker)	Tel: [phone]
Frank Buhagiar Susie Geliher	St Brides Partners Limited	Tel: [phone]