Indonesia M&A - Criterium Energy acquire Mont D'Or Petroleum

(Originally published on June 15, 2023)

On 14th June 2023, Criterium Energy announced that they have executed a sale and purchase agreement (“SPA”) to acquire all the issued and outstanding shares of Mont D’Or Petroleum Limited.

Deal value

The headline figure for the deal is a nominal US $1. However, once we take into consideration the debt held by Mont D'Or (US $32.5 million) and the issuing of US $1 million of new shares, the effective transaction value is US $ 33.5 million.

Mont D'Or assets

Mont D'Or hold 100% interest and are the operator of two PSC's in Indonesia:

• Tungkal PSC: covers three contract blocks that are located onshore south Sumatra. The PSC was extended in 2019, with the terms switching to the new Gross Split model from the expiry of the original contract in August 2022. The current contract scheduled to expire in August 2042.
• West Salawati PSC: covers two contract blocks that are located both onshore and offshore West Papua, in the Salawati basin. The current PSC falls under the legacy cost recovery terms and is scheduled to expire in December 2033.

Tungkal PSC

The Tungkal PSC contains two oil fields that are in production: Mengoepeh (MGH), and Pematang Lantih (PLT).

The MGH field was brought onstream in late-2004, with a development based on a number of wells and a central processing facility with a capacity of about 12,000 bbl/d. The PLT field was brought onstream in mid-2015, with a development based on a number of wells and a processing facility with a capacity of about 7,400 bbl/d. The processed oil is trucked to Pertamina's refinery in Plaju. Current production from the fields is reported to be just over 1,000 bbl/d, with 20 production wells reportedly onstream.

Criterium report a number of potential initiatives that could see production growth. These include infill drilling and well workovers for the producing fields as well as secondary recovery through water injection. In addition, there is potential to develop the gas resources at the North Mengoepeh (N-MGH), South Mengoepeh (S-MGH) and Macan Gedang fields that have a combined 20 Bcf of recoverable gas.

West Salawati PSC

The West Salawati PSC contains a single oil field that is in production: Balladewa (BLL-A).

The field was brought onstream in early-2018, with the recompletion of the discovery well and some minimal production facilities with a capacity of about 6,000 bbl/d. Current production from the field is reported to be just over 20 bbl/d, which I believe comes from a single production well.

The potential to expand production seems limited but Criterium have suggested there is some potential for well workovers or some step-out drilling.

My thoughts on the deal

For Criterium, the deal represents a fairly low-risk path to gain production status in Indonesia as well providing a team with experience in Indonesia.

Whilst there is some upside potential for the assets themselves, particularly the Tungkal PSC, the deal allows Criterium to show their commitment to Indonesia. The establishment of a local team and production will hopefully help them progress the Lengo field development that sits within the Bulu PSC, in which they acquired a 42.5% stake in December 2022. Getting this to FID (and extended the PSC) would have significantly more value for Criterium.

I wish them the best of luck!!