RH Petrogas announced that it has completed the acquisition of Orchard Energy's sole oilfield concession in South Sumatra from Temasek Hldgs. Under the terms of a 30-year prodn sharing contract, RHP will assume Orchard Energy's balance commitment of US$5.66m to carry out exploration works on 1,402 sq km concession block over 3 years.
The maximum period for exploration and evaluation of the contract area is 6 years with an option to extend a further 4 years provided more funds are committed, after which the PSC shall automatically terminate if no oil is found.
While this acqn may raise RHP’s profile as a regional O&G player, investors need to be reminded that the gestation period of such projects are quite long as the 1st exploration oil well is expected to be spud only in the 3rd year of its work program and prospects of hitting a commercial oil discovery are relatively low.
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