How Conrad’s $320M Farm Down Deal Unlocks Mako Gas Field Production
Conrad Asia Energy has partnered with PT Nations Natuna Barat to farm down a majority stake in the Mako gas field, securing full funding for its development and reducing capital risk. The deal positions Conrad to focus on other exploration assets while retaining operational control.
- Nations acquires 75% non-operated interest in Duyung PSC
- Conrad’s subsidiary WNEL retains 25% interest, fully carried to production
- Nations funds 100% of project costs, including WNEL’s share via a carry loan
- Milestone payments of US$16 million to WNEL across 2026–2027
- First gas from Mako targeted for Q4 2027, with WNEL remaining operator
Strategic Farm Down and Funding Secured
Conrad Asia Energy Ltd (ASX – CRD) has taken a significant step forward in its flagship Mako gas field development by entering into a farm down agreement with PT Nations Natuna Barat, a subsidiary of Indonesia’s Arsari Group. Under this deal, Nations will acquire a 75% non-operated participating interest in the Duyung Production Sharing Contract (PSC), while Conrad’s wholly owned subsidiary West Natuna Exploration Limited (WNEL) retains a 25% interest. Crucially, Nations will fund 100% of the project development costs, including WNEL’s share, through a carry loan agreement, effectively removing the capital burden from Conrad during the critical development phase.
Financial and Operational Implications
The transaction includes milestone payments totaling US$16 million to WNEL, spread over three tranches aligned with key project milestones from early 2026 through to first commercial production expected in late 2027. The overall capital expenditure to bring Mako to first gas remains estimated at US$320 million, consistent with prior guidance. With Nations providing full funding, Conrad can preserve cash and reduce financial risk while maintaining operatorship of the field, leveraging its deep technical knowledge and long-standing involvement in the asset.
Project Timeline and Market Context
First gas from the Mako field is targeted for the fourth quarter of 2027, with sales gas contracted to PT PLN Energi Primer Indonesia, a subsidiary of Indonesia’s state electricity company. The gas sales agreement, linked to Indonesian Crude Price benchmarks, supports the project’s economic viability amid rising domestic gas demand. The development plan involves a leased Mobile Offshore Production Unit (MOPU) and pipeline infrastructure connecting Mako to the Indonesian domestic market, underpinning the country’s energy security goals.
Consolidation of Ownership and Future Growth
WNEL is also in the process of consolidating full ownership of the Duyung PSC by acquiring minority interests from Coro Energy and Empyrean Energy, the latter following a dispute over unpaid cash calls. This consolidation will position Conrad with a 100% interest prior to the completion of the farm down to Nations. Beyond Mako, Conrad plans to advance exploration and development in its 100%-owned Aceh PSCs, aiming to leverage its operational capabilities and deliver growth through the end of the decade.
A Transformational Milestone
Managing Director Miltos Xynogalas described the transaction as transformational for Conrad, highlighting the value of partnering with a reputable Indonesian company and securing the necessary capital to bring Mako into production. The deal marks an inflection point after eight years of exploration and development work, setting the stage for Conrad to evolve from explorer to producer in a strategically important region.
Bottom Line?
With funding secured and operatorship retained, Conrad is poised to deliver first gas from Mako by 2027, reshaping its growth trajectory.
Questions in the middle?
- How will the dispute with Empyrean Energy impact final ownership and project timelines?
- What are the detailed terms of the confidential gas sales agreement with PLN EPI?
- How will Conrad balance capital allocation between Mako production and Aceh exploration?