CBM Asia announced that it has entered into a settlement deed to increase its participating interest in the Sekayu production sharing contract for the 583.49 km2 Sekayu block in the South Sumatra Basin of Indonesia to 26%.
Currently, the Sekayu PSC is held 50% by a consortium of shareholders through South Sumatra Energy (SSE) and 50% by PT Medco CBM Sekayu, as operator.
Under its original letter of intent, the Company acquired the right to earn, indirectly through SSE, a 12% participating interest in the Sekayu PSC (with the exclusive right to provide financing for up to an additional 12% participating interest) from certain arm’s length vendors in consideration for US$1,000,000 cash , of which US$730,000 was paid on December 14, 2009, and exploration expenditures totaling US$3,243,500.
Under the terms of the Deed, the Vendors have agreed to relinquish and transfer all of their interest in SSE and the Sekayu PSC to the remaining shareholders of SSE including the Company and Ephindo Sekayu CBM in exchange for, inter alia, the Company paying the Vendors the sum of C$75,000 in full and final settlement of the Cash Payment and assuming all of the Vendors’ obligations under the underlying participation agreement between the Vendors and Ephindo. Ephindo, in turn, will transfer all of its interest in SSE to the Company in exchange for a direct 21.5% participating interest in the Sekayu PSC. Upon completion of the transactions contemplated in the Deed, the Sekayu PSC will be beneficially owned as follows:
CBM Asia (indirectly through SSE) - 26.0%
Ephindo - 21.5%
Far East Methane LLC (FEM) - 2.5%
PT Medco CBM Sekayu - 50.0%
LNG World News Staff, May 27, 2012