Conrad Secures $320M Funding, Targets Mako Gas Production by 2027

Transformative Farm-Down Deal Anchors Conrad’s Growth

Conrad Asia Energy Ltd (ASX – CRD) has taken a decisive step forward in its evolution from explorer to producer by securing a landmark farm-down and financing agreement with Nations Petroleum (NPB), a subsidiary of Indonesia’s Arsari Group. The deal grants NPB a 75% non-operated interest in the Duyung Production Sharing Contract (PSC), home to the Mako gas field, while Conrad’s subsidiary West Natuna Exploration Limited (WNEL) retains 25%, subject to government approvals.

This transaction is pivotal – Nations Petroleum will fully fund the estimated US$320 million capital expenditure required to bring the Mako field into production, including contingencies and working capital, removing financing risk for Conrad. The first tranche of payments has already commenced, with full funding expected to be in place by the third quarter of 2026.

Mako Gas Field – A High-Quality Asset with Strong Demand Backdrop

The Mako gas field, located in the South Natuna Sea within the Duyung PSC, is the largest undeveloped gas field in the area, boasting 376 billion cubic feet (Bcf) of 2C contingent resources on a 100% basis, of which 63 Bcf is attributable to Conrad. The gas is high-quality, predominantly methane, and the field’s infrastructure supports a nominal production capacity of 150 million standard cubic feet per day (mmscfd), with current contracts set at 110 mmscfd.

Crucially, Conrad has secured a gas sales agreement with Indonesia’s state-owned power company PLN, which will purchase 100% of Mako’s gas at a price linked to the Indonesian Crude Price (ICP). This contract underscores the strong domestic demand for gas as Indonesia prioritizes energy sovereignty and reallocates export volumes to the domestic market.

Exploration Upside in Aceh PSCs and Beyond

Beyond Mako, Conrad’s portfolio includes the Aceh ONWA and OSWA PSCs, which hold a combined 15 trillion cubic feet (Tcf) of mostly deep-water prospective gas resources (P50 estimate), with 11 Tcf net to Conrad. These assets feature multiple discoveries and leads, including the Meulaboh and Singkil discoveries, with ongoing 3D seismic surveys planned to better define resource size and identify new prospects.

Conrad is actively pursuing farm-out discussions for these PSCs, aiming to leverage the value of its discoveries while managing capital expenditure. The company’s operator status across its projects allows it to maintain control and operational flexibility, a strategic advantage in the complex Southeast Asian gas market.

Strategic Partnership with Nations Petroleum Strengthens Local Position

The partnership with Nations Petroleum not only provides financial backing but also brings local expertise and connections critical for navigating Indonesia’s regulatory and commercial landscape. The Arsari Group’s two-decade track record in Indonesia upstream operations complements Conrad’s technical capabilities, enhancing execution and operational efficiency.

This alliance positions Conrad to capitalize on Indonesia’s rapidly growing gas demand, forecasted to increase by 60% over the next decade, driven by government policies favoring domestic gas prioritization and infrastructure development.

Outlook – From Exploration to Production and Growth

With first gas from Mako targeted for late 2027 and a robust gas sales contract in place, Conrad is poised to generate meaningful cash flow that will underpin its valuation and fund further exploration and development. The company’s extensive resource base, combined with strategic partnerships and a supportive market environment, offers multiple avenues for growth and value creation.

However, as with all upstream projects, uncertainties remain around regulatory approvals, exploration success, and production ramp-up. Investors will be watching closely as Conrad transitions into a near-term producer with a promising portfolio of assets in one of the world’s fastest-growing gas markets.