Serica Reports Strong Growth of Kambuna Field

Resources

Thursday, 05 August 2010 12:05

Serica Energy reported increasing production from its Kambuna field in North Sumatra. The field operator also restated its proven and probable (2P) reserves in the field.

Production rates from the Kambuna field have increased steadily during the first half of the year. Gas sales from the field averaged 35 million standard cubic feet per day (mmscfd) in June and 39 mmscfd in July. From every million cubic feet of gas over 90 barrels of condensate are extracted for sale. Serica generated a gross profit of US$3.1 million in Q2 2010 from its retained 25% interest in the Kambuna field, the company's largest quarterly gross profit to date.

The Kambuna field operator Salamander Energy plc announced yesterday that following an independent reserves audit of its operated fields, including Kambuna, it has re-stated its 2P reserves in the field. The operator also notes that production from Kambuna is expected to remain at current levels until 2013 and that production could then be maintained at or near to plateau beyond 2013 if contingent resources are converted to reserves. Based on this announcement, the gross 2P reserves of the Kambuna field as at 1 January 2010 are estimated to be 18.2 million barrels of oil equivalent (mmboe) on a 100% working interest basis.

"This estimate is lower than that previously reported by both Salamander and Serica and is based on the limited production data available to date. Serica will commission an independent review of reserves at the end of 2010, taking into account field performance through the second half of this year," Serica said in a statement.

The Glagah Kambuna Technical Assistance Contract (TAC) covers an area of approximately 380 square kilometres and lies offshore North Sumatra. Serica holds an interest of 25% in the TAC.

The Kambuna gas is used for power generation to supply electricity to the city of Medan in North Sumatra and for industrial uses. The gas sales prices per thousand standard cubic feet under the contracts with PLN and Pertiwi Nusantara Resources (“Pertiwi”) are approximately US$5.40 and US$7.00 respectively, escalated at 3% per annum. A third contract for the supply of gas for LPG attracts the same price as the PLN contract and has the potential to add about 10% to contracted gas sales.

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