Salamander Farms Into Gulf of Thailand Block

- Salamander Farms Into Gulf of Thailand Block

Friday, September 09, 2011
Salamander Energy

Salamander Energy plc announced that its fully owned subsidiary, Salamander Energy (Bualuang) Ltd has agreed to farm-in to Block G4/50 in the Gulf of Thailand, earning equity in the acreage from Mitsui Oil Exploration Co Ltd (“MOECO”). Following the completion of the transaction, Salamander will hold a 100% working interest in and operatorship of the acreage, while MOECO will retain certain commercial options in the case of a future discovery. Block G4/50 is located in the western Gulf of Thailand and surrounds the Company’s B8/38 licence that contains the Bualuang oil field and Bualuang East Terrace oil discovery. The farm-in is subject to Thai government and regulatory approval.

Key Points:

G4/50, at over 11,650 sq km, is one of the largest blocks of prospective acreage offshore Thailand. The block surrounds the Salamander-operated B8/38 licence in the western Gulf of Thailand

It consolidates Salamander’s acreage position in an area where it has extensive operating experience and geological knowledge

Major programme of 3D seismic in 2H 2011 will be followed by a multiple well exploration programme

As part of the farm-in agreement MOECO will retain certain commercial options in the case of a future discovery

Exploration expenditures incurred in G4/50 are deductible against tax payable on production revenue from the Bualuang oil field in B8/38

James Menzies, Chief Executive, Salamander Energy, said:

“We are delighted to secure a very substantial area of prospective acreage surrounding our Bualuang operations. Block G4/50 has been of growing interest to Salamander as our geological and subsurface understanding of the immediate play has developed. The region remains under-explored to date and we are looking forward to implementing our work programme, starting with an extensive 3D seismic campaign of over 2,900 sq. km on G4/50 in the fourth quarter of this year.”

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Salamander to Sell Stakes in Indonesia

- Salamander to Sell Stakes in Indonesia

Friday, September 02, 2011
Salamander Energy plc

Salamander has agreed terms with Risco Energy for the sale of Salamander Energy (Java & Sumatra) B.V. through which the Group holds five percent interests in the Offshore Northwest Java (ONWJ) and Southeast Sumatra (SES) PSCs respectively. The cash consideration is $55 million plus working capital adjustments of $1.3 million, with a further deferred cash consideration payable upon the buyer's participation in any extension of the ONWJ PSC.

Highlights

• Salamander has agreed to sell its five percent interests in the ONWJ and SES PSCs to Risco, with an effective date of 30th June 2011. The initial cash consideration for the transaction is $55 million plus working capital adjustments of $1.3 million. The deal is not subject to any additional approvals.
• In addition, a deferred cash payment is to be made upon confirmation of Risco's participation in the extension of the ONWJ PSC. The amount of the deferred payment will be dependent on the timing and level of participation in the ONWJ PSC extension. For a 5% participation, the payment will be capped at $4 million. The payment will be pro-rated to the 5% interest.
• Production attributable to the net 5% interests in the first half of 2011 averaged c. 6,000 boepd and proved and probable reserves attributable to the interests are estimated to be 13 million barrels of oil equivalent as at the mid-year 2011.

Background

The ONWJ and SES PSCs came into production in 1971 and are currently in long-term decline. The assets are currently operated by PT Pertamina Hulu Energi (ONWJ) and CNOOC SES Ltd. (SES).

• The PSCs are currently in their second extension phase, and are due to expire in January 2017 (ONWJ) and September 2018 (SES).
• The assets were originally acquired by the Group in the first half of 2006, since when the ONWJ and SES fields have produced approximately 12.5 million barrels of oil equivalent net to Salamander.
• During the first half of 2011, the interests generated approximately $6.3 million of cash flow post-tax and capex net to the Group.

James Menzies, Chief Executive, Salamander Energy, said, "We have realized excellent full cycle returns on the investment in these mature assets, and this is a timely moment for exit. The strategic motivation for this deal is to re-deploy capital from declining assets into operated, material growth projects where Salamander has influence."

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Sub-Commercial Discovery Disappoints Salamander Offshore Vietnam

- Sub-Commercial Discovery Disappoints Salamander Offshore Vietnam

Thursday, September 01, 2011
Salamander Energy plc

Salamander announced the completion of the Cat Ba-1X ("101-CB-1X") exploration well in Block 101-100/04, offshore northern Vietnam. Block 101-100/04 was the subject of a farm out as announced on May 31, 2011.

The 101-CB-1X well was drilled to a total depth of 1,724 meters. The well encountered 38 meters of net hydrocarbon pay in Tertiary clastics, the secondary objective of the well. The pay section comprises a series of gas-bearing sandstones underlain by an oil-bearing reservoir. A full suite of wire-line logs and pressure data were recorded over the reservoir sections and samples of oil and gas were recovered.

These data show that the Tertiary reservoirs are of good quality, however pressure data and seismic mapping indicates the in-place resource volumes encountered by the well are probably below levels needed for commercial development.

No oil shows were observed and only low levels of gas were recorded while drilling the primary objective, the Palaeozoic 'buried hills' play. Subsequent wire-line logging did not reveal any zones of interest. The Cat Ba-1X well has subsequently been plugged and abandoned as a sub-commercial discovery.

James Menzies, Chief Executive, Salamander Energy, said, "While a sub-commercial find is disappointing, we have an active drilling program into 2012 which sees a mix of exploration, appraisal and development around our three primary areas of focus. These are proven regional plays, where we believe we can create significant value."

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Salamander Appoints New CFO

- Salamander Appoints New CFO

Thursday, August 11, 2011
Salamander Energy plc

Salamander announced the appointment of Dr. Jonathan Copus as Chief Financial Officer, and a Board director, of the Company. He is expected to take up his position in the fourth quarter of 2011.

Jonathan, 39, has worked as an oil and gas equity research analyst for over 10 years, most recently as a Director of Deutsche Bank's Oil and Gas Equity Research team. Prior to becoming an analyst, he worked for Shell International as a geologist in its Deepwater E&P team based in Holland and Houston.

Jonathan has a PhD from the University of Cambridge and a First Class BSc in Geology from the University of Durham.

James Menzies, Chief Executive of Salamander Energy, said, "Jonathan is an individual of caliber and drive; an excellent hire for Salamander. He brings an outstanding grasp of our sector and the essential combination of geological and financial skills for a growing, technically-led E&P company. I and my fellow directors look forward to working with him and we believe that Jonathan will make a strong contribution to the future of Salamander."

Jonathan Copus, commented on his appointment, "I am excited to be opening a new chapter in my career. Salamander is a balanced business in which I believe great upside to exist. I look forward to working with James and the team to realize this potential."

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Salamander Spins Bit Offshore Vietnam

- Salamander Spins Bit Offshore Vietnam

Wednesday, August 03, 2011
Salamander Energy plc

Salamander announced the spud of the Cat Ba-1X ("101-CB-1X") exploration well in Block 101-100/04, offshore northern Vietnam.

The 101-CB-1X well will be drilled to a depth of approximately 1,900 meters. The primary objective is a Palaeozoic carbonate, (buried hill) structure with secondary objectives in the overlying Tertiary clastic section. The mean gross pre-drill estimate of prospective recoverable resource is approximately 100 MMbo. The well will be drilled by the Aquamarine Driller jack-up rig in a water depth of 49 meters. It is expected to take approximately 25 days to complete on a dry hole basis.

Salamander holds a 30% operated interest in Block 101-100/04, subject to final government approval of the farm-out of 20% interest to JX-Nippon Oil & Gas Exploration Corporation announced in May 2011.

James Menzies, Chief Executive of Salamander, said, "The Cat Ba prospect is an analogue to the neighboring Ham Rong Oil field that was declared commercial in 2010, both located in the Hai Phong sub-basin. We have reduced our financial exposure to the 101-CB-1X well through farm down, but remain highly leveraged to the upside in the event of success."

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Salamander Strikes Oil Offshore Thailand

- Salamander Strikes Oil Offshore Thailand

Monday, June 27, 2011
Salamander Energy plc

Salamander provided the following update on its current drilling activity in Thailand, including the announcement of a material oil discovery in the East Terrace prospect.

B8/38 License (Salamander 100%, operator)

The current drilling program, using the Ocean Sovereign jack-up rig located on the Bualuang Wellhead Platform ("WHP"), includes three new horizontal production wells, two horizontal sidetracks of existing wells and a pilot hole to test the East Terrace prospect. To date, two producers have been drilled and completed and the East Terrace exploration pilot hole drilled.

East Terrace Oil Discovery

A long reach well was drilled from the WHP to 2,961m measured depth to test the East Terrace fault block. This well encountered approximately 35 meters of net oil pay within three zones. Over 6 meters of net pay was encountered in the upper T5 sandstone interval. In the deeper T4 interval (the main reservoir unit in the Bualuang oil field) an additional 18 meters of net oil pay was encountered, while in the lower T3 interval a further 11 meters of net pay was found.

A full evaluation program including pressure measurements and fluid sampling was conducted over the intervals of interest, confirming the East Terrace as being a separate accumulation to the main field, with a different oil viscosity, gas/oil ratio and oil-water contact than the main Bualuang field. The preliminary evaluation of the data indicate a mid-case estimate of 50 MMbo in-place and a most likely recoverable volume in the range 8 - 14 MMbo. This range represents the high end of pre-drill estimates.

Bualuang Development Drilling

The development drilling program commenced on April 22nd, having been delayed due to administrative issues and necessary repairs to the rig's legs. To date, two of the five development wells planned for this phase of development have been completed and brought on stream, including a long-reach well into the previously undrilled northern area of the Bualuang structure. At this location the top T4 main reservoir came in some 4 meters high to prognosis, offering scope for an upgrade to gross rock volume and hence reserves for the field overall.

The next two development wells in the Bualuang field are to be completed, as planned. The final horizontal producer will be completed either in the East Terrace or in main body of the field, subject to a decision based on analysis of data acquired from the East Terrace exploration pilot hole.

Following this development drilling campaign, the Ocean Sovereign jack-up rig will be moving off location for a scheduled inspection and certification.

During the fourth quarter of 2011, a sidetrack of an existing well will be conducted with a workover rig (under an existing contract). In addition, Salamander is currently preparing to tender for another jack up rig to complete the exploration campaign in B8/38, which is now anticipated to take place in 4Q 2011.

Block L15/50 (Salamander 50%, operator)

The Dao Ruang-3 appraisal well was spudded on 25th April and to date has reached a depth of approximately 1,590 m measured depth. The well encountered difficulties while drilling the Kuchinarai shale interval. The well has been sidetracked twice in order to by-pass the shale which it has now done. With the challenging shale formation now behind casing, drilling will continue to the planned total depth of approximately 2,565 m MD in order to test the Pha Nok Khao target interval. Approximately 14 days of additional drilling time is anticipated in order to complete the well.

Commenting on the progress of the B8/38 drilling program, James Menzies, Chief Executive, said, "We are pleased to deliver a material oil resource addition through the exploration drill bit, at the top end of pre-drill estimates. The ability to immediately tie-in to nearby infrastructure means these are high value barrels, which we expect to book and which will lead to a sharp upward revision to Bualuang reserves.

In addition, the development wells, though delayed, are performing in-line with our expectations, giving us further confidence in our ability to predict the behavior of the Bualuang field reservoir."

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Salamander Begins Drilling at East Kalimantan

- Salamander Begins Drilling at East Kalimantan

Monday, June 20, 2011
Salamander Energy plc

Salamander announced the spud of the South Sebuku-2 ("SS-2") appraisal well, Bengara-1 PSC, East Kalimantan. The onshore South Sebuku gas discovery was made in 2009 and is thought to contain gross mean contingent resources of circa 80 Bcf. Salamander has a 41% interest in the Bengara-1 PSC.

SS-2 will target gas-bearing sandstones in the Tabul, Meliat and Naintupo formations and be drilled to approximately 1,370 metres total vertical depth sub-sea. It will be drilled using the HPS-1 land rig and is expected to take approximately 30 days to complete on a dry hole basis.

In the event of appraisal success, the Bengara-I partners will look to tie the South Sebuku discovery into the South Sembakung gas field, located within the neighboring Simengarris PSC. The South Sembakung development is currently on-going with a view to coming on-stream in 4Q 2012, in order to supply the Bunyu Island Methanol plant with 25 MMscfd.

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Salamander to Farm-Out Stake Offshore Vietnam

- Salamander to Farm-Out Stake Offshore Vietnam

Tuesday, May 31, 2011
Salamander Energy plc
by SubseaIQ

Salamander has executed an agreement to farm-out a 20% interest in Block 101-100/04, Offshore Northern Vietnam to JX Nippon Oil & Gas Exploration Corporation ("JX-NOEX"). Block 101-100/04 is operated by Salamander and contains the Cat Ba oil prospect that will be tested with the CB-1X well in Q3 2011.

JX-NOEX will earn a 20% working interest in Block 101-100/04 from Salamander through funding a promoted cost of the CB-1X well.

The Cat Ba oil prospect has oil potential in both basement and in the overlying clastics, and has a mean prospective resource of c. 100 MMbo. It is an analogue to the neighboring Ham Rong oil field, declared commercial by Petronas in 2010. The prospect will be tested by the CB-1X exploration well, to be drilled in July 2011, using the Aquamarine Driller jack-up drilling unit.

Completion of the transaction is subject to host government approval.

Commenting on the transaction, James Menzies, CEO of Salamander said, "Bringing in a partner like JX-NOEX demonstrates the industry interest in this emerging oil play and highlights the attractions of the Cat Ba prospect. This transaction reduces Salamander's financial exposure to the drilling of the CB-1X well, while we remain highly leveraged to the upside in the event of success at Cat Ba."

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Salamander Lines Up Vantage Rig Offshore Vietnam

- Salamander Lines Up Vantage Rig Offshore Vietnam

Friday, May 20, 2011
Salamander Energy plc

Salamander issued the following Interim Management Statement for the period from January 1, 2011 to May 18, 2011.

Highlights

• 2011 average production forecast maintained at 22-23,000 boepd
• Active E&A campaign during the period as part of a 13 well 2011 program
  • Drilling on the Dao Raung structure found significant gas column, follow-up drilling is underway
  • Technical analysis of Angklung-1 ongoing in advance of follow-up well in 4Q
  • 2D and 3D Seismic surveys completed on SE Sangatta confirming continuation of Angklung trend, in advance of well in 4Q
• Producing assets performance in line with expectations, development drilling underway at Bualuang oil field
• Reserves upgrade at Bualuang field: Ultimately recoverable proved & probable reserves increased 7 MMbo to 33.5 MMbo
• Contract signed for construction of Bualuang Bravo Platform
• Completion of new debt facility imminent

Exploration and Appraisal

Thailand

The Group completed one appraisal well during the period, the Dao Ruang-2 well in block L15/50, Northeast Thailand, while progressing its analysis of a follow up location on the Dao Ruang structure ahead of drilling during the current year. The well intersected a number of the targeted fracture zones with associated gas shows. Gas was seen all the way to TD, without any water, demonstrating a significant gas column in the Dao Ruang structure. An openhole DST was undertaken but only sub-commercial flow rates were recorded indicating a low permeability formation with a limited open, connected fracture network at the Dao Ruang-2 location. The Dao Ruang-3 well spudded at the end of April and is targeting an independent fault network in the Dao Ruang structure where it is hoped the well will encounter an open fracture network.

Offshore in block B8/38 in the the Gulf of Thailand, development drilling on the Bualuang platform is underway and the East Terrace prospect will be tested as part of this program. Exploration drilling elsewhere in the B8/38 block will follow the completion of development drilling.

Indonesia

The Group has been continuing its technical analysis of the Angklung-1 discovery well and the existing 3D seismic data in order to better understand and map the play systems in the Northern Kutei area. This analysis will assist in identifying the location of the follow up wells in the Bontang PSC planned for 4Q 2011, which will be aimed at appraising the gas play and exploring the oil play.

In the SE Sangatta PSC, adjacent to the Bontang PSC, the Group completed 2D and 3D seismic surveys during 1Q. The results of these surveys are now being interpreted, with early indications of a number of prospects on trend with the Angklung discovery, confirming the continuation of the prospective trend into the SE Sangatta license. A well on this license is planned for 4Q 2011.

In the Tarakan Basin the HPS-1 land rig has commenced mobilization to the South Sebuku-2 well site and is expected to spud during May 2011.

Vietnam

The Aquamarine Driller jackup rig has been contracted to drill the Cat Ba prospect, offshore North Vietnam. This well is expected to spud in July 2011.

Production and Development

The Group's producing assets have performed broadly to plan. During 1Q 2011 production averaged 19,434 bopd. The Group reiterates its average production forecast for 2011 of 22-23,000 bopd. The current development drilling program on the Bualuang oil field, Gulf of Thailand, incorporating six development wells, will drive increased volumes in the second half of the year.
During the first quarter the Group announced a reserves upgrade on the Bualuang field adding a further 7 MMbo of proved and probable (2P) reserves which take the ultimately recoverable 2P reserves on the Bualuang field to 33.5 MMbo. It has also awarded the contract for the Bravo Wellhead Platform, to be delivered and installed in mid-2012. This will be a 16 slot platform and further development drilling from the Bravo platform in H2 2012 will see production from the Bualuang field increase to 15,000 bopd in 2013.
A Gas Sales Agreement for the Kerendan gas field, Bangkanai PSC, Onshore Kalimantan has been agreed and is awaiting signature. This will see the commercialization of circa 135 Bcf of gas at a price in excess of $4.50 per Mcf.

Balance Sheet

The Group is in an advanced stage of negotiation and expects imminently to announce agreement on a new debt facility. It will be a $325 million senior and junior reserves based lending facility that will replace the existing senior, junior and acquisition bridge facilities in addition to providing additional liquidity.

At March 31, 2011, total Group debt, including the $100 million convertible bond, was $273 million, total available funds were $103 million, and net debt (including the convertible bond) was $170 million.

Directorate Change

As announced on 3 May Nick Cooper, Chief Financial Officer, will be leaving the Company to join Ophir Energy as Chief Executive Officer with effect from 31st May. The Company has begun a search for a successor and anticipates an orderly transition. A further announcement will be made in due course.

Outlook

Through a combination of higher than expected commodity prices, a growing production base and the expected refinancing of its debt facility the Group's solid financial position has been further strengthened. Operationally the focus is on delivering the 2011 exploration and appraisal program that combines a mixture of low risk, high value wells with higher impact drilling in both Vietnam and Indonesia with the Angklung follow up wells in Bontang and SE Sangatta PSCs.

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Salamander Resumes Drilling Ops at Thai Block

Salamander Resumes Drilling Ops at Thai Block

Wednesday, April 27, 2011

Salamander Energy plc

Salamander provided the following update on its current drilling operations in Thailand and Indonesia.

- Thailand -

Dao Ruang-3 well, Block L15/50

The Dao Ruang-3 appraisal well has spudded and will be drilled to a planned depth of 1,900 m TVDSS using the MB Century-26 rig. The well is forecast to take 45 days to drill on a dry hole basis. Salamander has a 50% interest in, and is operator of, Block L15/50.

Block B8/38

The Ocean Sovereign rig is back on location at the Bualuang Alpha wellhead platform and has resumed drilling operations. Salamander has a 100% interest in, and operatorship of, Block B8/38.

- Indonesia -

South Sebuku-2 appraisal well, Bengara-1 PSC

The HPS-1 land rig that will be used to drill the South Sebuku-2 well ("SS-2") has commenced mobilization to the well site. The SS-2 well is expected to spud in mid-May. SS-2 is appraising the South Sebuku gas discovery made in 2009 that is thought to contain gross mean contingent resources of 80 Bcf. Salamander has a 41% interest in the Bengara-1 PSC.

Salamander Sees Gas Shows at Thai Well

Salamander Sees Gas Shows at Thai Well

Friday, April 15, 2011
Salamander Energy plc

Salamander provided the following update on its Thai drilling operations in Block L15/50, onshore Northeast Thailand, and Block B8/38, Gulf of Thailand.

Dao Ruang-2 well, Block L15/50

Dao Ruang-2 ("DR-2") drilling operations at the Dao Ruang-2 location have been completed. Following an openhole drill stem test ("DST") the well failed to flow at a sustained commercial rate and is in the process of being temporarily suspended for potential re-entry at a later date. Drilling now moves to the second location of the two well program, as originally planned, targeting an independent fault network in the structure.

The DR-2 well was drilled to a depth of 2,212 meters true vertical depth sub-sea ("m TVDSS") into the eastern flank of the Dao Ruang structure, targeting a swarm of faults and fractures identified from high resolution 3D seismic. The well intersected a number of fracture zones with associated gas shows and experienced gas influx associated with a fault system around 1,840 m TVDSS. Gas shows were seen all the way to TD, with no sign of water, demonstrating a significant gas column in the Dao Ruang structure.

An openhole DST was undertaken across an interval between 1,008 - 2,211 m TVDSS. The section was tested following an acid wash, however only sub-commercial flow rates were recorded, indicating very low permeability formation and a limited open, connected fracture network at the DR-2 location.

The MB Century 26 rig will now be mobilized to the Dao Ruang-3 ("DR-3") drilling location. The DR-3 well will target a separate fracture set on the northern flank of the Dao Ruang structure with a different orientation to those seen in DR-2, providing a greater chance of encountering an open fracture network and an opportunity to test at a commercial flow rate.

The DR-3 well will be drilled to a planned depth of 1,900 m TVDSS and is expected to spud within the next 8 days. The well is forecast to take 45 days to drill on a dry hole basis.

Salamander has a 50% interest in, and is operator of, Block L15/50.

James Menzies, Chief Executive Officer of Salamander Energy, said, "While it is disappointing that we did not encounter commercial gas at our first Dao Ruang location, it is clear from drilling that there is a significant gas column in the structure. The two well program was originally designed to target two independent fault networks in different orientations, and we expect to spud the second well in a matter of days."