Kulim buys 60% stake in oil and gas company in Indonesia for US$133.55m

PETALING JAYA: Kulim (Malaysia) Bhd yesterday agreed to buy a 60% interest in oil and gas-based (O&G) PT Citra Sarana Energi (CSE) for US$133.55 million to strengthen its footprint in Indonesia's expanding O&G sector.
The acquisition done through Kulim's subsidiary, Kulim Energy Nusantara Sdn Bhd (KENSB), is in furtherance of at Memorandum of Understanding (MOU) signed in October last year with Kulim's long time plantation partner, PT Graha Sumber Berkah (GSB), which allows Kulim to tap into the knowledge and expertise of GSB as the local partner, in exploring potential O&G opportunities in Indonesia.
CSE is engaged in the exploration and development of the South West Bukit Barisan Block (SWBB) Production Sharing Contract (PSC) in Central Sumatera, where its wholly-owned subsidiary PT Radiant Bukit Barisan E&P (RBB) is the operator.
Historically, the SWBB block has been explored by two other previous operators since 1991. A previous seismic survey and subsequently drilling via the Sinamar-1 well tested significant gas and condensate with minor oil from multiple zones.
Kulim's chairman Datuk Kamaruzzaman Abu Kassim said the CSSPA would upon completion see KENSB, PT Wisesa Inspirasi Sumatera (WIS) and PT Inti Energi Sejahtera (IntiEnergi), owning 60%, 32% and 8% interests respectively in CSE.
"The acquisition is consistent with Kulim's long term business plan to diversify its business activities to other sector apart from oil palm plantation in order to cushion any earning fluctuation especially with the divestment of the group's plantation business in Papua New Guinea and the Solomon Islands," he said.
Kulim will use RM850 million from the proceeds from the recent sale of Kulim's 48.97% stake in New Britain Palm Oil Ltd to part finance Kulim's commitment within the SWBB Block, other potential venture in the oil and gas sector, and expansion of oil palm plantation in Indonesia.
On the development of the SWBB onshore project, Kamaruzzaman said the production testing on the first exploration well (Sinamar-2) following the drilling by RBB to a depth of 5,500 ft was progressing with "very encouraging indications."
Meanwhile, Kulim Managing Director Ahamad Mohamad said that Indonesian authorities have approved drilling for three additional wells in 2015.
He also said Kulim is working closely with relevant authorities to pave the way for the company to generate revenue streams as early as the second half of 2015.
Ahamad said the 30-year concession period for the SWBB block provides vast potential given that Central Sumatera is considered one of the most prolific oil production basins in Indonesia.