Pan Orient to sell 51% interest in East Jabung PSC, onshore Indonesia

Pan Orient Energy has agreed to sell a 51% direct working interest and operatorship of the East Jabung production sharing contract (PSC) in Indonesia to a subsidiary of Talisman Energy.

The transaction includes an upfront cash payment of $8m and a firm commitment to fund the first $10m for the initial exploration well apart from all associated G&A and overhead costs incurred by the operator until the first expenditure is finished.

Pan Orient has an option to buy a 20% working stake in a Talisman operated South Sumatra joint study area.

Talisman Energy has also agreed for a contingent commitment to fund the first $5m for an appraisal well, if justified, apart from all related G&A and overhead incurred by the operator until the first $5m expenditure is completed.

The transaction, which is subject to Government of Indonesia approval, is expected to be completed in March 2015.

Pan Orient president and chief executive officer Jeff Chisholm said: "Pan Orient has demonstrated significant progress towards the corporate initiative of strengthening the Company’s balance sheet and de-risking its portfolio of assets, through partial sale or seeking partners.

"The final goal is to retain meaningful working interests with significant upside exposure and a strong balance sheet, facilitating growth and flexibility going forward. Today’s announcement is a significant milestone towards this goal and is an important addition to the sale agreement of a 50% interest in the Thailand L53/48 asset entered into and announced last week."

Apart from the East Jabung PSC, Pan Orient has operated interests in Batu Gajah and Citarum PSCs in Indonesia.