REG - Seascape Energy Asia - Successful Block 2A Farm-Out

Seascape Energy AsiaAnnouncement

02/12/2024 07:00

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RNS Number : 3167O  Seascape Energy Asia PLC  02 December 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 596/2014 AS AMENDED AND TRANSPOSED INTO UK LAW IN ACCORDANCE WITH
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR").

 

2 December 2024

 

Seascape Energy Asia plc

(the "Company", "Seascape Energy" or "Seascape")

Successful Block 2A Farm-Out

Seascape Energy, an E&P company focused on Southeast Asia, is pleased to
announce the successful farm-out of a 42.5% participating interest in the
Block 2A Production Sharing Contract (the "PSC" or "Block 2A") to INPEX
CORPORATION (the "Transaction"). Following completion of the Transaction,
Seascape will retain a 10% participating interest in the PSC through its
wholly owned subsidiary, Topaz Number One Limited ("TNOL") (the "Retained
Interest").

Transaction Highlights

·    Full, uncapped carry for Seascape's Retained Interest (10%) through
the remaining exploration phase which includes one firm wildcat well and one
contingent appraisal well (subject to a commercial discovery);

·    A cash consideration of US$10 million payable in full at Transaction
completion;

·    A further contingent cash consideration of US$10 million payable on a
commercial discovery;

·    Reimbursement of certain historic costs associated with the PSC
totalling ~US$0.5 million;

·    Partnered with INPEX CORPORATION, Japan's largest exploration and
production company, which is expected to take over as operator of the PSC with
existing, synergistic operations in deepwater Sarawak

The Transaction is subject to partner and regulatory approvals and anticipated
to complete at the end of Q1 2025.

Block 2A Highlights

Block 2A is located offshore Sarawak, eastern Malaysia in the North Luconia
hydrocarbon province covering approximately 12,000 km(2) in water depths
between 100 -1,400 metres. Block 2A contains the world-class Kertang prospect,
located across four Oligo-Miocene reservoirs, which is:

·    Well-defined, large, four-way dip structural high with over 220 km2
of closure;

·    Covered by high-quality, wide-beam 3D seismic shot by CGG in 2015;

·    Exhibits direct hydrocarbon indicators (DHIs) including an overlying
gas cloud feature and amplitude brights;

·    CPR undertaken by ERCE on Kertang in 2024 assigns total gross,
unrisked mean prospective resources of 9.1 TCF plus 146 mmbbl of NGLs (~1.7
billion boe);

·    CPR chance of success of ~20%;

·    Bintulu LNG, one of the world's largest LNG facilities, is located
onshore Sarawak;

·    Based on regional offset wells, third-party high-level cost estimates
for a successful Kertang exploration well in excess of US$70 million (gross).

Following completion of the Transaction, Seascape will retain a material
exposure to the Kertang prospect with net unrisked mean prospective resources
of ~910 bcf and ~15 mmbbl of NGL (~166 mmboe). A summary of the CPR published
in June 2024 can be found on the Company's website:
https://seascape-energy.com/presentations-reports/
(https://seascape-energy.com/presentations-reports/) .

Block 2A was originally awarded to Seascape Energy in February 2023 as part of
the Malaysian Bid Round 2022 (MBR 2022) by PETRONAS Malaysia Petroleum
Management ("MPM"). MPM acts on behalf of PETRONAS in the overall management
of Malaysia's petroleum resources throughout the lifecycle of upstream oil and
gas assets.

Nick Ingrassia, CEO of Seascape, commented:

"The successful farm-out of Block 2A marks an important turning point for
Seascape Energy Asia following its strategic pivot in the middle of 2024.
Attracting a high-quality partner into the world-class Kertang prospect,
alongside the recent award of 12 gas discoveries in the DEWA PSC, highlights
the vital role that nimble, forward thinking, independent E&P companies
have to play in the Southeast Asian upstream ecosystem.

"The commercial terms of the transaction allow Seascape to retain material
exposure to the significant upside associated with drilling the 9 TCF Kertang
prospect at nil ongoing cost while also providing capital to be reinvested
into the business - including bringing the DEWA cluster through to
development.

"I am enormously proud of our team which has worked tirelessly over the past
few months to deliver a transaction which not only secures Seascape's future -
but also creates a platform for growth. We look forward to working with our
new partner, INPEX CORPORATION, along with PETRONAS and Petros to bring the
transaction to a successful completion during Q1 2025."

Transaction Details

Seascape Energy has executed three inter-conditional documents, which have the
collective effect of transferring a 42.5% participating interest in the Block
2A to INPEX CORPORATION in return for a cash and carry consideration on the
Company's Retained Interest (10%) in the PSC.

INPEX CORPORATION is Japan's largest exploration and production (E&P)
company, and is currently involved in projects across multiple continents,
including the Ichthys LNG Project in Australia as Operator. INPEX CORPORATION
currently operates Block 4E offshore Sarawak, Malaysia.

The Transaction will be effected through a Share Sale & Purchase Agreement
with INPEX CORPORATION for the entire share capital in Longboat Energy (2A)
Limited ("LB2A"), the sole asset of which is a 36.75% participating interest
in the PSC (the "SSPA"). Immediately prior to the execution of the SSPA,
Seascape also entered into an Asset Transfer Agreement between LB2A and TNOL
for an additional 5.75% in the PSC (the "ATA"). The net result will be the
transfer of a 42.5% participating interest in Block 2A to INPEX CORPORATION
via LB2A at completion of the Transaction.

The consideration payable under SSPA is US$10 million cash on completion with
an additional US$10 million contingent cash payment payable within 15 days
following announcement of a commercial discovery of Crude Oil or approval by
Petroliam Nasional Berhad ("PETRONAS") of a Gas Holding Area, both as defined
in the PSC. In addition, at completion, INPEX CORPORATION will reimburse
~US$0.5 million of historic costs under a 'locked box' mechanism to 30 June
2024 and pre-completion costs associated with the PSC from the same date.

As part of the Transaction, the parties have also entered into a Carried
Interest Agreement (the "Carry") between LB2A and TNOL. Pursuant to the Carry,
INPEX CORPORATION will provide a full, uncapped carry of the total costs,
expenses and liabilities associated with the Company's 10% Retained Interest
in Block 2A through the Minimum Work Commitment and/or Minimum Financial
Commitment with such associated costs being recoverable by INPEX CORPORATION
from Cost Oil, both as defined under the PSC. The Minimum Work Commitment
includes one firm exploration well and one contingent appraisal well up to a
minimum depth and spend level. As part of the Carry, INPEX CORPORATION will
also cover all costs associated with Petroleum Sarawak Exploration &
Production Sdn. Bhd.'s carried 7.5% interest and provide all required
financial guarantees on behalf of Seascape.

The SSPA, ATA and Carry remain subject to the usual and customary
representations, warranties and conditions to completion for transactions of
this nature. In addition, the SSPA and ATA remain subject to regulatory and
partner approvals pursuant to certain provisions under the PSC and Joint
Operating Agreement. LB2A currently acts as operator of Block 2A and as part
of the Transaction INPEX CORPORATION is anticipated to become operator of the
PSC.

Completion of the Transaction is anticipated during Q1 2025. Following
completion, partners in the PSC will be INPEX CORPORATION (42.5%), Petronas
Carigali Sdn. Bhd (40.0%), Petroleum Sarawak Exploration & Production Sdn.
Bhd. (7.5%) and Topaz Number One Limited (10.0%) a wholly owned subsidiary of
Seascape.

Seascape Outlook

The farm-out of Block 2A marks an important milestone in the transformation of
Seascape over the past six months into a fully funded, Southeast Asian focused
E&P business with a combination of firm value in discovered resources on
the DEWA PSC and significant, blue-sky upside associated with its Retained
Interest in the world-class Kertang prospect.

Following completion of the Transaction, Seascape is anticipated to have
substantial cash resources which will be used to meet its share of planned
expenditure on the recently awarded DEWA PSC, pursue growth in Malaysia and
seek additional opportunities across Southeast Asia which remains an active
and attractive destination for upstream investment.

Due to the exploration nature of Block 2A, the Transaction is not anticipated
to have a material impact on the operating profits or losses of the Company.

Investor Meet Company

Nick Ingrassia (CEO), James Menzies (Executive Chairman) and Pierre Eliet (EVP
Corporate and Country Chair Malaysia) will host a live presentation for
investors via Investor Meet Company at 10 AM GMT on 3 December 2024.

The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until 9
AM GMT on 2 December 2024, or at any time during the live presentation.

Investors can sign up for free via:
https://www.investormeetcompany.com/seascape-energy-asia-plc/register-investor
(https://www.investormeetcompany.com/seascape-energy-asia-plc/register-investor)

Investors who follow Seascape Energy on the Investor Meet Company platform
will automatically be invited.

Ends

 Enquiries:
 Seascape Energy Asia plc                               IR@seascape-energy.com (mailto:IR@seascape-energy.com)
 James Menzies (Executive Chairman)

 Nick Ingrassia (Chief Executive)

 Pierre Eliet (EVP Corporate, Country Chair Malaysia)

 Stifel (Nomad and Joint Broker)                        Tel: +44 20 7710 7600
 Callum Stewart                                         SNELSeascape@Stifel.com

 Jason Grossman

 Ashton Clanfield

 Cavendish Capital Markets Limited (Joint Broker)       Tel: +44 20 7397 8900
 Neil McDonald

 Pete Lynch

Standard

Estimates of reserves and resources have been carried out in accordance with
the June 2018 SPE/WPC/AAPG/ SPEE/SEG/SPWLA/EAGE Petroleum Resources Management
System ("PRMS") as the standard for classification and reporting. A summary of
the PRMS can be downloaded
from:-https://www.spe.org/en/industry/petroleum-resources-management-system-2018/.

Review by Qualified Person

The technical information in this release has been reviewed by Dr Pierre
Eliet, EVP Corporate & Business Development, Country Chair Malaysia, who
is a qualified person for the purposes of the AIM Guidance Note for Mining,
Oil and Gas Companies. Dr Eliet is a geologist with more than 25 years'
experience in the oil and gas industry. Dr Eliet has a BA Degree in Earth
Sciences from Trinity College, Dublin and PhD in Geology from Manchester
University, UK.

About INPEX CORPORATION

INPEX CORPORATION is Japan's largest exploration and production (E&P)
company, and is currently involved in projects across multiple continents,
including the Ichthys LNG Project in Australia as Operator. By thoroughly
making its oil and gas business cleaner while expanding its 5 net zero
business areas, INPEX aims to provide a stable supply of diverse and clean
energy sources including oil, natural gas, hydrogen, ammonia and renewables as
a pioneer in energy transformation. For more information, visit
https://www.inpex.co.jp/english/index.html.

Glossary

"bcf"                means billion standard cubic feet

"boe"                means barrels of oil equivalent

"CPR"              means Competent Persons Report

"m"                  means metres

"mmboe"         means million barrels of oil equivalent

"NGL"              means natural gas liquids

"tcf"                 means trillion standard cubic feet

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