Empyrean Energy has resolved a dispute and solidified its partnership with Conrad Asia Energy, the operator of the Duyung production sharing contract (PSC) in Indonesia. The settlement allows Empyrean to retain its economic interest in the PSC under new equity arrangements, moving past a cash call dispute related to financing the Mako gas field development.

Project Significance and Settlement Details

The Mako field on the Duyung PSC contains 376 billion cubic feet of 2C contingent gas resources, making it the largest unexploited gas resource in the area, with potential for further increases through exploration. The resolution eliminates future direct cash call obligations for Empyrean and withdraws Conrad's earlier notice of forced withdrawal. The settlement is seen as creating strong stakeholder alignment and expediting project execution towards a targeted production start-up in the fourth quarter of 2027, with total project financing secured.

Revised Equity Structure

The settlement involves a multi-stage restructuring of interests:

1. Empyrean's 8.5% participating interest in the Duyung PSC will be transferred to Conrad's subsidiary, West Natuna Exploration Limited (WNEL).
2. Empyrean and Conrad will establish a Singapore-domiciled special purpose vehicle (SPV), with Empyrean holding 8.5% and Conrad holding 91.5%.
3. Following Indonesian government approval, a 75% interest in the Duyung PSC will be transferred from WNEL to farm-in partner Nations Natuna Barat, with WNEL retaining 25%.
4. Finally, 100% of the shares in WNEL will be transferred to the Empyrean-Conrad SPV.

Financial Terms

As part of the agreement, Empyrean will pay Conrad approximately $353,000, representing 50% of the outstanding cash call amount. A further instalment of about $353,000 will be paid to Conrad from Empyrean's share of the SPV dividends once gas sales commence. The development is expected to utilize a leased mobile offshore production unit.