Rift Basin Resources (RIF.H-V) finishes due diligence in Indonesia
Nov 28, 2013 - News Release
Rift Basin Resources Corp. is proceeding with its proposed acquisition of a 70-per-cent interest in PT Sinergi Wijaya Kusumah (PT Sinergi), as contemplated in the memorandum of understanding announced June 5, 2013. Rift Basin has received a legal opinion from Indonesian counsel supporting the validity and enforceability of the underlying contracts, the related rights over petroleum production, and the proposed ownership structure between the parties. In addition, 2-D seismic, well log data, past production records and geological data have been obtained on PT Sinergi's onshore multireservoir oil field known as the Dandangilo and Beji block. The field is the first of several anticipated acquisitions by PT Sinergi to exploit for oil and gas. The field contains 110 existing shut-in oil wells within an 80-square-kilometre area located in the Bojonegoro district, East Java, Indonesia. According to historical data, the field had OOIP (original oil in place) of 112 million stock tank barrels. Pertamina, the state-owned oil company, recorded production of approximately 20 million stock tank barrels during the period 1963 to 1980, after which the field was shut in. The company is now well positioned to complete a geological report for the field in anticipation of the initial work program for secondary and tertiary oil recovery from the producing Ngrayong sandstone formation, at a shallow depth of 150 metres to 500 m. In addition, with the technical assistance of an established intermediate oil and gas production company, Rift Basin expects to reprocess existing 2-D data to evaluate the hydrocarbon potential of the deeper Middle Miocene carbonate Kujung formation within the field.
Subject to the entering into of a definitive agreement, and as confirmed in the legal opinion, Rift Basin also has the right to earn in to additional fields currently under negotiation by PT Sinergi. These additional fields are also located in the Cepu block area/East Java basin, and include a decommissioned 40-well block which historically produced at its peak 4,000 barrels per day, a highly prospective block with six existing shut-in wells drilled to a depth of 1,200 m in 1989, and the recent discovery of a lost and abandoned oil field that was blown up and buried by the Dutch immediately prior to the Japanese invasion during World War II. The existing MOU is not a definitive agreement and does not create obligations to the parties thereto other than giving Rift Basin the opportunity to negotiate and enter into a definitive agreement to establish oil and gas production for the field. There can be no assurance that any transaction in connection with the MOU will be completed. Any definitive agreement will be subject to applicable regulatory approval.
The East Java basin opportunity
PT Sinergi's Dandangilo and Beji block has historic and current oil production. Approximately 15 km to the south of the field, ExxonMobil has discovered very substantial oil accumulations in the Kujung formation at its Banyu Urip Cepu block at a depth of approximately 1,700 m. Public reports suggest the block is currently producing approximately 33,000 bpd and is expected to produce 165,000 bpd by end of third quarter 2014. The block is estimated to contain up to 600 million barrels (6.7 per cent of Indonesia's total reserves) and 1.7 trillion cubic feet of natural gas.
Stock options
The company has granted incentive stock options to certain directors, officers and consultants of the company to purchase up to 2.8 million common shares of the company at a price of 10 cents per common share. The stock purchase options are exercisable on or before Nov. 28, 2018, and vest in stages over the course of a year with 25 per cent to vest immediately and a further 25 per cent of the options to vest in each three-month period thereafter. The stock options are being granted pursuant to the terms of the company's stock option plan and are subject to regulatory approval. |
