Conrad Asia Energy has locked in a transformative farm-in and financing deal for its flagship Mako gas field, setting the stage for first gas in late 2027. The company also resolved historic disputes, strengthening its position in Indonesia’s growing gas market.
- NNB acquires 75% interest and funds 100% of Mako development costs
- Conrad’s subsidiary retains 25% interest, fully carried through production
- Settlement reached with Empyrean Energy over historical cash call arrears
- Seismic acquisition planned for Aceh PSCs to expand resource base
- First gas from Mako targeted for Q4 2027 with $320 million capex
Farm-In and Financing Deal Transforms Mako Development
Conrad Asia Energy Ltd (ASX – CRD) has taken a significant step forward in its ambition to become a major regional gas producer with the signing of a farm-in and financing agreement with PT Nations Natuna Barat (NNB), a subsidiary of Indonesia’s Arsari Group. Under this landmark deal, NNB will acquire a 75% non-operated participating interest in the Duyung Production Sharing Contract (PSC), home to the Mako gas field, and provide full funding for the project’s development costs, estimated at US$320 million.
Conrad’s wholly owned subsidiary, West Natuna Exploration Limited (WNEL), will retain a 25% interest, which is expected to be fully carried through to commercial production, subject to Indonesian government approvals. This arrangement not only secures the capital required to advance the project but also alleviates financial risk for Conrad during the critical development phase.
Resolving Historical Disputes and Strengthening Corporate Structure
In addition to the farm-in, Conrad has settled longstanding cash call arrears with Empyrean Energy PLC through a binding term sheet. This agreement involves the transfer of Empyrean’s 8.5% interest in the Duyung PSC to WNEL and the creation of a Singapore-based special purpose vehicle (SPV) jointly owned by Conrad and Empyrean. This restructuring aligns stakeholders and clears the path for smoother project execution.
Empyrean will receive payments totaling approximately US$707,000, representing full settlement of past claims. The resolution of this dispute is a pivotal moment for Conrad, removing a significant operational hurdle and reinforcing its governance framework.
Advancing Exploration and Development in Aceh PSCs
Beyond Mako, Conrad is actively progressing its exploration portfolio in the Aceh PSCs, where it holds 100% operated interests. A 500-square-kilometre 3D seismic acquisition program is slated to commence in early 2026, targeting shallow-water gas discoveries and leads with a historical success rate near 70%. This initiative aims to refine resource estimates and unlock further development opportunities, potentially expanding Conrad’s gas production footprint in Indonesia.
Financial Position and Outlook
During the quarter, Conrad drew US$7.2 million under a carry loan agreement to fund long-lead equipment for the Mako project, reflecting active progress on the ground. The company ended the quarter with US$1.36 million in cash, supplemented by anticipated tranche payments from NNB totaling US$16 million, scheduled across key project milestones through to first commercial production in late 2027.
Managing Director Miltos Xynogalas highlighted the transformational nature of these developments, emphasizing the quality of the Indonesian partner and the secured funding as critical enablers for Conrad’s transition from explorer to producer. The company is also exploring strategic partnerships for its Aceh assets to further bolster its growth trajectory.
Looking Ahead
With government approvals pending but expected, Conrad is on track to deliver first gas from Mako in the fourth quarter of 2027. The combination of secured funding, resolved disputes, and ongoing exploration activity positions the company well to capitalise on Indonesia’s rising domestic gas demand amid the broader energy transition in Asia.
Bottom Line?
Conrad’s secured funding and strategic partnerships mark a turning point, but regulatory approvals and execution risks remain key watchpoints.
Questions in the middle?
- Will Indonesian regulatory approvals for the farm-in and interest transfers proceed smoothly and on schedule?
- How will Conrad manage its cash flow and funding needs given its low cash balance and reliance on tranche payments?
- What impact will the upcoming Aceh seismic survey have on Conrad’s resource base and potential future developments?