INDONESIA – SOUTH BLOCK A

Raisama has entered into a shareholders’ agreement (REE Shareholders’ Agreement) with RENCO in relation to RENCO’s Singapore based holding company, RENCO Elang Energy Pte. Ltd (REE). REE is the 51% owner and designated operator of the SBA Production Sharing Contract. Under the REE Shareholders’ Agreement, Raisama will fund certain study, seismic and drilling activities in SBA in consideration for the acquisition of a 75% controlling shareholding interest in REE which delivers an indirect 38.25% interest in the block.

Location: South Block A is located in the centre of the highly prolific North Sumatra Basin. The basin is one of the most productive hydrocarbon provinces in Indonesia with over 80 known oil and gas fields. The United States Geological Survey (USGS) World Petroleum Report (2000) indicates that reserves of 1,900 mmbbl of oil including natural gas liquid and 34 Tcf of gas have been found in the North Sumatra Basin. The USGS report estimates that over 9 Tcf gas (mean) and 210 mmbbl (mean) of oil have yet to be discovered in the basin, offering encouragement for future exploration.

Fig 1: Location of South Block A North Sumatra

SBA comprises extensive exploration acreage of over 2,100 sq km, divided into 2 distinct areas informally designated SBA 1 and SBA 2. The block is surrounded by large producing oil and gas fields and extensive petroleum infrastructure. Several multi Tcf gas fields and multi million barrel oil fields are located on trend with the concession, including the giant Arun gas field with initial gas reserves of over 15 Tcf and the nearby Rantau oilfield with a reported 300 mmbbls of oil.

 

Fig 2: South Block A surrounded by oil & gas fields and infrastructure

Technical assessment and prospectively:

South Block A lies on two major petroleum trends that exist in the area:

The Shallow Oil Field Trend (annotated in Fig 2) runs down the axis of the fold belt passing through numerous oil fields, including the 300 million barrel Rantau field located around 15 – 20 km to the southeast of SBA 1 and just to the west of SBA 2.

The area in South Block A 1, through which the trend passes, represents a break in the occurrence of discovered oil fields which is coincident with more complex structuring and relatively poor seismic data. Modern exploration technologies are expected to help resolve these technical difficulties and provide for the delineation of leads and prospects already identified along this trend to significantly increase the chances of oil discoveries.

Leads and prospects:

South Block A contains numerous leads and prospects (figure 2) which have been generated through technical evaluation of the block by the designated operator, RENCO. Volumetric analysis of these prospects underpins the prospectivity of South Block A and any exploration success will likely have a considerable impact on the value of the Company.

The suite of leads defined by the PSC operator in the two blocks from which provisional prospective resource estimates have been prepared, has estimated unrisked mean in place prospective resources for the two blocks at 858 mmbbl of oil or 1.47 Tcf of gas.

Amanah Prospect

A prospectivity review over the SBA Production Sharing Contract (PSC) completed in 2011 identified and prioritised six significant oil and gas prospects.  One of these, the Amanah oil prospect, is particularly encouraging and is scheduled for drilling later in 2012.  Amanah has been assessed to have a most likely prospective resource in excess of 40 million barrels of oil from six potential reservoir zones on the structure.

This prospect is close to commercial oil discoveries on the same structural trend and is directly adjacent to the Iee Tabue oil and gas field, discovered in 1971 and which by 1989 had produced nearly 12 million barrels of premium 50.3 °API light oil and 24 billion cubic feet of gas, a high value product in the current rapidly expanding and undersupplied local gas market.

The Amanah well will be relatively shallow with a total programmed depth of 1200 m and will be designed to intersect a minimum of six potential petroleum reservoir zones. One of the potential reservoir zones exhibits a distinct flat spot, with associated high amplitude, near the top of the structure (indicated on the seismic line below). Flat spots and amplitude anomalies are indicators of a gas cap potentially overlying an oil accumulation. Such indications of petroleum trapped in the structure are positive for all potential reservoir targets throughout the depth of the well, providing supporting evidence of the petroleum trapping integrity of the structure on this prolific trend where oil with associated gas production is common.

The study also identified three additional prospects, including a large oil prospect and three large gas prospects, which are similarly prospective but require further delineation by geological field survey, followed by the planned seismic acquisition.

The 1970’s through 1980’s, the time of discovery and production of the nearby Iee Tabue field, was a period of low oil prices and few markets for gas, with major companies of the time targeting larger oil fields. The SBA area was then part of a much larger exploration licence with less attention focussed on the area now covered by SBA. At the same time, exploration technology was less sophisticated and many of the wells in the area were located inaccurately, without the benefit of seismic data. Wells drilled were often not fully evaluated as they would be today, particularly if potential oil zones encountered did not appear to meet the high economic hurdles of the period. Consequently, the SBA PSC is, by modern criteria, regarded as an underexplored area in a highly prolific oil and gas region with significant opportunity for major discoveries.