The total consideration due to Serica, based on an effective date of July 1, 2008, is $52.75 million. Completion is subject to the required government and partner consents.
The Kambuna technical assistance contract (TAC), located 40km offshore northern Sumatra, Indonesia, contains the Kambuna gas condensate field in which Serica and Salamander currently hold interests of 65% and 35%, respectively.
First gas from the Kambuna field is expected to be produced by the end of 2008 with production from the field expected to reach the planned field plateau production rate of 50 million cubic feet per day of gas plus 4,000 to 5,000 barrels per day of condensate after fully commissioning the onshore facilities early in 2009. After completion of the transaction Serica will hold an interest of 50% in the Kambuna TAC.
The Kutai production sharing contract (PSC), located onshore and offshore East Kalimantan, Indonesia, is an early stage exploration block operated by Serica with a present interest of 78%. Both 2D and 3D seismic surveys are planned in 2008, in preparation for the commencement of exploratory drilling in 2009. After completion of the transaction, Serica will hold an interest of 54.6% in the Kutai PSC.
Paul Ellis, Serica CEO, said: This is an excellent deal for Serica, as it demonstrates the viability of our strategy of creating and then realizing a portion of the shareholder value added through the drill bit since our initial success at Kambuna at the end of 2005. In addition, from 2009 we will begin to enjoy significant cash flow from our retained 50% interest in the field.
