Coro Energy, the Southeast Asian energy company with a natural gas and clean energy portfolio, today announced that the partners in the Duyung PSC have approved an updated Plan of Development ("PoD") and have approved and secured alignment with SKKMIGAS on the PoD. The PoD now been submitted to the Indonesian Ministry of Energy and Mineral Resources for approval. Coro holds a 15% interest in the Duyung PSC.

Coro also announces that an Operator commissioned Competent Persons Report ("CPR") has been prepared by GaffneyCline Associates ("GCA") for the Mako development.

Highlights:

·    Revised PoD approved by partners

·    Based on the CPR:

o  Compelling project economics:

§ 51% IRR

§ NPV10 net to Coro of US$87M (US$577M gross) in the Best Case (2C) scenario

o  42 Bcf net entitlement 2C resources to Coro during the PSC life

o  Plateau production of 120 MMscf/d for six years in the Best Case (2C) scenario

o  CPR capital expenditure requirement to first gas estimated at US$251M gross (US$38M net to Coro).  Coro expects to secure a Reserve Based Lending facility for a large portion of the capital.

·    Operator has indicated that termed Gas Sales Agreements ("GSA"), for gas sold into Singapore, are under discussion with SKK Migas with a view to finalising sales arrangements in the near future.

The Operator of the Duyung PSC is WNEL, a 100%-owned subsidiary of Conrad Asia Energy Ltd, and has continued to technically mature the development of the Mako gas field alongside negotiations of  GSA(s), both in preparation for Final Investment Decision. This has included finalising the revised PoD, on which the JV partners have now secured alignment with governmental regulator, SKK Migas, and submission for ministerial approval. 

The GCA CPR is closely aligned with the PoD and is premised on a two-phased development with six wells in phase 1 and a further two wells in phase 2 after 5 years of production. The wells will be tied back to a leased production platform at the field, with sales gas transported via the West Natuna Transportation System pipeline to Singapore for sales to the Singapore market. The development plan includes first gas in 2025, with a 120 MMscf/d production plateau and a gross recoverable 2C contingent resource of 413 Bcf gas total and 281 Bcf net entitlement attributable to the Duyung PSC JV partners (42 Bcf net to Coro) during the PSC life.

The Operator of the Duyung PSC is WNEL, a 100%-owned subsidiary of Conrad Asia Energy Ltd, who hold a 76.5% interest in the Duyung PSC. Coro hold 15%. Empyrean Energy plc hold 8.5%.

The Operator CPR, and the updated PoD, assumes first gas in 2025 and calculates the last economic production years prior to the current Duyung PSC expiry date for Low, Best and High cases of 2033, 2036 and 2036 respectively, which extend to 2039 and 2054 for the Best and High respectively if the Duyung PSC is extended.

The Operator CPR utilises a gas price of US$9.97/Mscf in 2025 which is calculated on a Brent linked price formula with a Brent slope of 12% and a  Brent price deck of US$80/bbl in 2025, escalating 2% pa from 2027 thereafter.  Different gas prices may eventually be agreed with the gas buyers and the regulator when the GSA's are eventually signed. The Operator CPR estimates that the post tax NPV10 resulting from the Best Case Contingent Resources within the Duyung PSC acreage and within life of Duyung PSC (363 Bcf) is some US$577M (US$87M net to Coro) representing a 51% IRR.

Under the PoD and CPR, first gas from the Mako gas project is planned to be evacuated via the West Natuna Transportation System.   The development will utilise a Conductor Support Frame (CSF) for one dry wellhead and gas import-export support, bridged-linked to a leased bridge linked Mobile Offshore Production Unit. The CPR Phase 1 capital expenditure is estimated to be US$251M and total capital expenditure will be US$303M. These estimates will be updated as a consequence of envisaged Front End Engineering and Design (FEED) studies. Coro expects to secure a Reserve Based Lending facility for a large portion of the capital.

James Parsons, Coro  Energy Chairman, commented:
"We are delighted with progress on our flagship asset, the Duyung PSC, where we have now approved an updated PoD and are moving to finalise the long-awaited GSA, both significant milestones on the path to building material value for our investors. As demonstrated by the US$87M NPV10 (net to Coro) reported in the CPR, recent structural increases in global gas markets very much now favour Coro Energy and the Mako gas field."

Duyung PSC Key Facts

• Located in the West Natuna basin, offshore Indonesia 
• Shallow depth of reservoir, circa 400m, Intra-Muda sandstone reservoir
• Six wells have penetrated the field to date including two wells in Q4 2019 in highly successful appraisal drilling campaign
• Two wells successfully flow tested at rates of 9 MMscf/d to 11.5 MMscf/d  
• Demonstrated large, single tank reservoir
• The field is located close to the West Natuna Transportation System ("WNTS") offering the potential to sell gas into the Singapore market
• Favourable gas pricing in the developed Singapore market, with piped gas from West Natuna competing with LNG import