Sumatec to buy 65% of Indon oil company

The Edge, 11 May 2005

Sumatec Resources will acquire a 65% stake in PT Petro Java Energy, which has been invited by Indonesia’s national oil company, Pertamina, to submit a 20-year joint operation proposal for an abandoned marginal oil field in Eastern Java, Indonesia.

Its subsidiary Sumatec Petroleum Development Sdn Bhd yesterday entered into a heads of agreement to acquire the stake. Sumatec’s initial investment in the venture will be between US$3 million (RM11.4 million) and US$4 million.

Production of the oil field is expected to start next year or the latest by 2007 with an expected initial production of 5,000 barrels per day.

The field has a proven reserve of 95 million barrels of oil and a recoverable oil output of 24 million barrels based on a recovery factor of 25%. Based on the current oil price of US$52 per barrel, the field is worth US$1.25 billion.

The Eastern Java marginal oil field was discovered in 1803 and oil was first produced in 1905. The field, which has not been touched since 1940, has 32 wells drilled and capped.

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