Andalas Energy and Power Plc: Bunga Mas Update

Source Press Release
Company Andalas Energy and Power plc 
Tags Corporate Deals, Deals, Upstream Activities
Date February 12, 2019

Andalas Energy and Power Plc recognises recent press speculation regarding the Bunga Mas PSC ("PSC") acquisition (announced 29 August 2018) and would like to clarfy the current position.

Andalas has been advised that the government of Indonesia ("GOI") has provided the PSC contractors, with an agreement to convert the PSC into a gross split production sharing contract.  The contractors, including the vendor, Tilegarre Corporation, have elected not to sign it because certain issues regarding the terms of the renewal have not yet been resolved to their satisfaction. 

Andalas has been advised that the GOI has requested that the contractors deposit funds into an escrow account as security against a future work programme.   This requirement would result in Andalas having to raise significant amounts of additional capital which has a material negative impact on the  economics of the project.

The sale and purchase agreement is conditional on the PSC being extended on terms satisfactory to Andalas and includes a representation from the vendor that no performance bonds or other financial guarantees or obligations are required or in place under the PSC.  At this stage, this condition precedent has not been fulfilled and the representation is incorrect. 

Andalas will continue to monitor the situation over the coming days as further information becomes available following the decision by the vendor not to sign the gross split PSC. 

Andalas expects to be in a position to provide an update on or before 7.00am 18 February 2019.

To date Andalas has incurred direct costs of an estimated £200,000 of legal, professional and other direct costs in connection with Bunga Mas.  No consideration has yet been paid to the vendor and will not be paid unless and until Andalas secures an interest in the licence.

Andalas Energy & Power PLC CEO, Simon Gorringe, said: "We are disappointed by the recent developments at Bunga Mas.  As its stands the financial commitment required for Andalas to fund its participation in the Bunga Mas PSC would require significantly more capital than the original SPA envisaged.  We are currently of the opinion that, without significant changes to the GOI's expectations around funding the commitments it makes it very difficult for Andalas to proceed with the acquisition. 

"We remain hopeful that an amicable position can be reached with GOI and look forward to updating the market next week.""

To end on a positive note, Colter is currently drilling, and we expect further news on the Company's interest in Badger in the coming weeks.  Each of these projects has the potential to transform the near term outlook for the Company, whilst the Company looks to secure other opportunities and provide further guidance on Bunga Mas." 

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd