Wind in Conrad’s sails as upgraded Aceh gas resource drives further exploration

Conrad Energy Asia’s two production sharing contracts offshore Aceh are proving to be more valuable than initially thought with a recent report increasing resources by 75% to 214Bcf.

The new best estimate (2C) Contingent Resource – 161Bcf of which is attributed to the company – are hosted within three of the four discovered gas accumulations in the Offshore North West Aceh (Meulaboh) and Offshore South West Aceh (Singkil) PSCs.

Conrad Energy Asia (ASX:CRD) noted that the upgrade follows the Competent Persons Report evaluating the flow tested discoveries in the PSCs to address the range of potential in-place and recoverable volumes, in addition to devising conceptual development schemes.

Additionally, the CPR also attributed a net present value of US$88m to the three discoveries whilst noting that the fourth – Keudapasi – has very little seismic data and has not been included in the Contingent Resource at this stage.

These discoveries, which were made in the 1970s, are located in shallow waters, have shallow reservoir depths and are close to the shoreline, close to several identified commercialisation opportunities.

All discoveries were successfully flow tested at potentially commercial rates of almost pure methane – with very low levels of nitrogen and carbon dioxide – but were not previously developed due to low gas prices at that time.

Potential for more growth

Managing director Miltos Xynogalas said the resource numbers and valuation ascribed in the CPR represent a material uplift to Conrad’s total resource numbers and valuation of its asset base, which provides a basis for the company to evaluate their commercial potential.

“Conrad’s initial scoping study of gas markets in the region has been positive, and we are optimistic of commercialising these discoveries and delivering a portfolio of growth opportunities to our shareholders,” he added.

“Apart from the discovered resources, which represent near-term development opportunities, the two PSCs also have excellent exploratory opportunities in the shallow waters which we consider low-risk, based on historic success rates.

“Over the coming years, Conrad hopes to roll out an inventory of shallow and deep-water drilling targets to augment the existing discoveries and continue to build our resource base.

“We believe there is significant upside for Conrad in the exploratory opportunities that exist in both the shallow and the deep-water areas, where, as previously announced, we have already identified a host of high impact gas plays.

“The deep-water areas potentially contain several multi-trillion cubic feet gas leads and prospects, with evidence of hydrocarbon accumulations from observed gas chimneys and seismic flat spots.

Chairman Peter Botten adds with Indonesia moves towards developing a more sustainable energy base and doubling its gas production by 2030, Conrad could play a role in that transition with its flagship Mako gas project in the West Natuna Sea, gas resources in the Aceh PSCs, and high impact exploration opportunities in the deeper water areas of Aceh.

Aceh gas discoveries

The Meulaboh and Singkil PSCs were signed in January this year and classified as “frontier areas”, granting Conrad with attractive fiscal terms which are amongst the most favourable in Indonesia.

Meulaboh covers 9,182km2 and contains the Meulaboh-1 and Meulaboh East-1 gas discovery wells which intersected gas columns of 90ft and 30ft while flowing gas at maximum rates of 6.7 million standard cubic feet of gas per day (MMscfd) and 7.99MMscfd respectively.

It also includes the Keudepasi-1 well which intersected a 60ft gas column and flowed gas at a maximum rate of 5.34MMscfd.

The 10,700km2 Singkil block contains the Singkil-1 gas accumulation that intersected a 270ft gas column and flowed gas at a maximum rate of 10.06MMscfd.

Upcoming activity

Conrad plans to acquire 500km2 of modern 3D seismic data in 2024 across the discoveries to delineate near field, low risk drilling opportunities as well as evaluate the host of other targets in the shallow water areas.

This is expected to identify additional structures as much of the two PSCs do not have seismic coverage.

This article was developed in collaboration with Conrad Asia Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.