Indonesia-focused oil and gas company Conrad Asia Energy is preparing an initial public offering (IPO) on the Australia Stock Exchange to raise some A$45 million (US$30.3 million) as it seeks to develop its Indonesia upstream business.
The Singapore incorporated company’s flagship asset is its 76.5% working interest in the Duyung PSC, which contains the Mako Gas Field, one of the largest undeveloped gas fields in the West Natuna Basin, Indonesia.
After first discovering Mako in 2017, Conrad secured approval of an initial plan of development and said it has subsequently undertaken extensive appraisal work to delineate a full field 2C Resource of 413 Bcf (on a 100% basis). Conrad said it is working with the Government of Indonesia on a revised plan of development to accommodate greater gas volumes and production rates and is currently in the process of negotiating gas sales agreements with potential buyers in Singapore and Indonesia. The revised plan contemplates 12 years of production commencing in 2025.
In addition to the Duyung PSC, Conrad operates a portfolio of oil and gas licences containing leads and prospects. The company believes there is significant exploration upside potential provided through its Offshore Mangkalihat PSC (OM) and via the Aceh Joint Study Areas.
The Aceh Joint Study Areas contain numerous offshore gas discoveries as well as large exploration opportunities, noted Peter Botten the company’s chairman in a prospectus released 9 September. Botten is well known for leading Papua New Guinea-focused oil and gas player Oil Search for 25 years before it was acquired by Santos.
Botten highlighted that Asia’s demand for both oil and natural gas continues to grow as the region seeks access to cheap, locally sourced power to fuel its strong economic growth and as an alternative transition fuel. In 2020, Asia represented more than one third of global oil demand and more than one fifth of global natural gas demand. Conrad will be targeting the Singapore market, in which natural gas has accounted for 95% of power generation since 2014. Conrad believes there is a significant market opportunity in Asia to provide natural gas as a cleaner alternative to carbon intensive coal power generation and enable the region to sustain its strong economic growth as it transitions to renewable energy over the coming decades.
Conrad considers an investment in the Company to be compelling for a number of reasons including:
• attractive portfolio of assets focused on offshore gas in Asia;
• operatorship of the Mako Gas Field, one of the largest undeveloped resources in the West Natuna Sea;
• significant upside from continued appraisal and exploration on existing asset base;
• compelling gas market and regional energy fundamentals;
• multitude of near-term catalysts for value accretion; and
• experienced Board and Management Team with proven track record.
Proceeds of the offer are primarily intended to be used for:
– maturation of the Mako Gas Field including front end engineering and long lead items required for the development of the gas field;
– further work on the joint study areas in Aceh and their conversion into a production sharing contract; and
– seismic acquisition over leads identified in both the Offshore Mangkalihat PSC and should they be converted into PSCs the Aceh joint study areas.