Coro Scraps Deal to Enter Indonesian Gas Project
London-listed Coro Energy said on January 31 it had dropped plans to buy a stake in the Bulu production-sharing contract (PSC) off Indonesia – a deal it first agreed to over a year ago.
The PSC off the coast of East Java holds the Lengo gas field, independently certified to hold 359bn ft3 in recoverable gas. Coro agreed to buy a 42.5% interest in the project in September 2018 from Singapore’s HyOil for a little over $12mn in cash, shares and working capital adjustments. The pair then revised the deal in July last year, making payments contingent on various project milestones being met.
The companies agreed to complete the transaction by December 3 last year. As regulatory approvals did not arrive in time, this deadline was not met, and they began negotiating a six-month extension.
However, Coro said in a stock filing on January 31 that it had decided not to proceed with the deal, because its risks had “substantially” increased.
“Following the recent successful drilling campaign on the Duyung PSC, together with the growing number of sizeable opportunities in the region, Coro can be selective about the assets it chooses to bring into its portfolio,” the company explained. “In that context, with the approvals still outstanding and there being concerns around the future of the operating partner, the potential changes to the composition of the Bulu partnership group and the possibility of new requirements being introduced in satisfying the plan of development at Bulu, the Bboard views the risks associated with the Bulu acquisition from Coro's perspective to have significantly increased,” it said.
Other shareholders in the Bulu PSC include operator Kris Energy (42.5%) and local partners Satria Energindo (10%) and Satria Wijaya Kusuma (5%).