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REG - Coro Energy PLC - Mako Gas Project - Updated Plan of Development

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RNS Number : 9091Y  Coro Energy PLC  09 September 2022

9 September 2022

 

Coro Energy Plc

("Coro" or the "Company" and together with its subsidiaries the "Group")

 

Mako Gas Project - Updated Plan of Development

 

Coro Energy PLC, the Southeast Asian energy company with a natural gas and
clean energy portfolio, is delighted to announce 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 is also pleased to announce 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.

 

As reported in the CPR (dated 26 August 2022) and specified in the PoD
revision, upside exists to increase the plateau rate to 150 MMscf/d, should
reservoir deliverability be sufficient. GCA has confirmed Mako contingent
resources that are broadly in agreement with the PoD as set out in the table
below.

 

 

Duyung PSC - Contingent Resources, GCA Operator CPR

 MAKO GAS FIELD                                 CONTINGENT RESOURCES          CONTINGENT RESOURCES             CONTINGENT RESOURCES

 (Bcf gas)                                      GROSS (100%)                  WITHIN PSC GROSS (100%) *        NET ATTRIBUTABLE TO CORO (15%) **

 Reservoir:                                     Low       Best      High      Low        Best       High       Low           Best          High

 Upper sand, intermediate zone and Lower sand
 During Duyung PSC life                         249       413       442       219        363        389        25            42            45
 Requires Duyung PSC extension                            24        336                  21         296                      2             34
 Total                                          249       437       779       219        384        685        25            44            79

 

* The CPR estimates that 88% of the Mako field is within the PSC boundary

** After deduction of the 23% contractor take

 

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, 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."

 

The information contained in this announcement has been reviewed by Leonardo
Salvadori, Coro's Managing Director OF Oil & Gas, a qualified geologist
and geophysicist and member of the Italian Society of Petroleum Engineers. The
volumes included in this announcement are in accordance with SPE standards.
Bcf means billion standard cubic feet of gas; MMscf/d means million standard
cubic feet of gas per day; bbl means barrels; and Mscf means thousand standard
cubic feet of gas.

For further information please contact:

 Coro Energy plc                            Via Vigo Consulting Ltd

 James Parsons, Executive Chairman

 Ewen Ainsworth, Chief Financial Officer

 Cenkos Securities plc (Nominated Adviser)  Tel: 44 (0)20 7397 8900

 Ben Jeynes

 Katy Birkin

 Vigo Consulting (IR/PR Advisor)            Tel: 44 (0)20 7390 0230

 Patrick d'Ancona

 Charlie Neish

 WH Ireland (Broker)                          Tel: 44 (0)20 7220 1670 / 44 (0)113 946 618

 Harry Ansell

 Katy Mitchell

 Gneiss Energy Limited (Financial Advisor)    Tel: 44 (0)20 3983 9263

 Jon Fitzpatrick

 Doug Rycroft

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the EU
Market Abuse Regulation 596/2014 which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended and supplemented from time to
time. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

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