GSS Energy

GSS Energy: (S$0.275) Investing in Ramba's West Jambi block
GSS Energy will invest up to US$6m into Ramba's oil and gas operating assets located in West Jambi block in Sumatra, Indonesia, adding to its current operations in Central and East Java.

The investment is intended to cover all related costs, fees and expenses required to complete drilling of two onshore exploration wells, which sits in a proven region, with transportation infrastructure nearby.

Ramba currently holds a 100% working-interest (as the operator) for the West Jambi block in an operation cooperation agreement (KSO scheme) with Indonesia's Pertamina, which gives it the rights to explore and exploit the concession area for 20 years till 2031.

In a nutshell, the scheme essentially allows for any oil produced from the concession to be sold to Pertamina at a price which covers the unit production cost plus an unspecified profit element.

International petroleum consultancy company, RISC Operations, has reviewed nine prospects and eight lead wells at the West Jambi block and has identified ~426m barrels of un-risked gross prospective potential oil equivalent (mmboe) and risked gross prospective oil potential of 83 mmboe.

However, the investment agreement between GSS and Ramba is still preliminary and lacks specifics on how GSS is able to get a return on its investment, as well as Ramba's specified operating conditions. The details are expected to be released soon, given that the two wells are scheduled to commence drilling operations in 2H15.

Currently, only one broker on the street has coverage on the counter, with a Buy rating and TP of $0.65.