NuEnergy Prepares for May Drilling Start with $3.9M Cash and Key Gas Sales Deal

Operational Progress at Tanjung Enim PSC

NuEnergy Gas Limited has taken a significant step forward in its Indonesian unconventional gas projects by commencing drilling site preparation (DSP) at the Tanjung Enim Production Sharing Contract (PSC) in South Sumatra. This initiative is a critical component of the company’s early gas sales strategy, with the first well expected to be spudded in May 2025. The DSP activities encompass comprehensive groundwork including access road grading, bridge repairs, land clearing, and installation of essential drilling infrastructure such as well cellar boxes and flare stacks. Notably, one well pad is designated for PT Perusahaan Gas Negara’s (PGN) compressed natural gas (CNG) facility, underscoring the integrated approach to commercialisation.

Commercial Agreements and Regulatory Milestones

Following the Heads of Agreement between NuEnergy and PGN, the parties have finalised the terms of the Gas Sales and Purchase Agreement (GSPA), which remains subject to approval by Indonesia’s Ministry of Energy and Mineral Resources (MEMR). The recommendation from SKK Migas, the upstream oil and gas regulator, has been submitted, marking a pivotal regulatory milestone. Upon MEMR’s endorsement, NuEnergy and PGN will formalise the GSPA, paving the way for gas production and sales. This agreement is central to NuEnergy’s strategy to monetise its coal bed methane reserves and transition from exploration to production.

Progress Across Other PSCs

Beyond Tanjung Enim, NuEnergy continues to advance its other South Sumatra assets. At the Muralim PSC, the company is intensifying dewatering efforts to generate production data, with well services conducted on well MU-006 to expedite this process. NuEnergy has also engaged with SKK Migas to secure an extension for ongoing production testing, reflecting a methodical approach to reservoir evaluation.

Meanwhile, environmental permitting is underway at the Muara Enim PSC, where NuEnergy has submitted and revised environmental reports and proposals to Indonesia’s Ministry of Environment and Forestry. A recent technical meeting focused on water management aspects, with the company awaiting final approval. Conversely, NuEnergy is in the process of relinquishing its interest in the Muara Enim II PSC, aligning with contractual terms and strategic portfolio management.

Financial Position and Funding

Financially, NuEnergy reported net cash outflows from operating and investing activities during the quarter, consistent with its development phase. The company maintains a robust cash position of approximately A$3.9 million at quarter-end, supported by loan facilities totaling over A$3 million from subsidiaries of its ultimate parent company. These unsecured loans carry a 10% annual interest rate and are structured to be repaid from future production revenues. The company’s prudent capital management underpins its ability to fund ongoing drilling and development activities.

Strategic Outlook

NuEnergy’s focused strategy to integrate its South Sumatra PSCs into a cohesive coal bed methane hub positions it well to meet Indonesia’s growing energy demand with cleaner gas supplies. The imminent commencement of drilling and the anticipated signing of the GSPA represent critical inflection points. Success in these areas will not only validate the commercial viability of NuEnergy’s unconventional gas assets but also enhance shareholder value through the transition to production and revenue generation.