Criterium Energy is targeting first gas production in the first half of 2026 from two fields, Southeast Mengoepeh (SE-MGH) and North Mengoepeh (N-MGH), within its onshore Tungkal Production Sharing Contract (PSC) in South Sumatra, Indonesia.

Development Plan and Progress

An extended well test for the SE-MGH development was completed in the third quarter, with results aligning with management expectations and supporting the immediate development of 15 billion cubic feet (Bcf) of contingent resource. A second production well could potentially expand resources beyond this estimate. Progress on pipeline construction, facilities, and gas sales agreements supports the development of both fields, with SE-MGH expected to come on stream first, followed by N-MGH. The SE-MGH field is anticipated to deliver initial production of 5 to 7 million cubic feet per day.

Pipeline and Infrastructure

Both fields will be developed via a pipeline connecting to existing, underutilized processing and transportation infrastructure. A letter of intent has been signed with Dredolf Indonesia for the construction of the SE-MGH pipeline. Under this agreement, Dredolf will fund and construct a 14-kilometer pipeline, with Criterium paying a monthly transportation fee from first gas. Construction is expected to commence early next year and take three to six months. The pipeline is sized to accommodate potential incremental volumes from N-MGH and the MGH field.

Commercial Agreements and Gas Sales

The company is progressing towards a binding heads of agreement and a gas sales agreement (GSA) with a credible Indonesian offtaker. Pricing will be determined following the GSA's execution, with recent South Sumatra contracts quoted as a benchmark between US$6 to US$7 per million British thermal units. The anticipated sales point is a Transgasindo (TGI) metering station, targeting gas markets in South Sumatra, Java, and Singapore.

Costs and Project Economics

Gas from SE-MGH requires minimal processing, involving the removal of water and small amounts of condensate for sale in the domestic market. Strong reservoir pressure of over 1000 psig eliminates the need for compression during the initial production phase, reducing upfront capital costs. The overall project budget for SE-MGH has been reduced to between US$2 million and US$3 million, down from an initial estimate of US$3 million to US$5 million. Approximately US$1.7 million has been incurred to date, with remaining costs including land acquisition for the pipeline and approximately US$1 million in contingencies.

Future Development Phases

Following the development of SE-MGH and N-MGH, the operator will focus on the Macan Gedang field, which has contingent resources of 13 Bcf of gas, and the Cerah and MGH-43 prospects over the next two to three years. These Phase 2 gas project fields will be exploited via pipeline tie-in to existing facilities or modular egress solutions, with first gas targeted as early as 2027. The Tungkal PSC has base prospective resources of 51 Bcf of gas and 21.3 million barrels of liquids.

Bulu PSC Update

Despite the asset being up for sale, progress was made on the Bulu PSC offshore East Java. Following delays in a divestment transaction, Criterium has taken a more active role in the development of the Lengo field, which has an estimated best estimate contingent resource of 360 Bcf of gas. This included notifying the operator, KrisEnergy, of breaches and deficiencies in the Joint Operating Agreement. The company is now holding discussions with key stakeholders to revise the development plan and progress