Conrad Asia Energy has taken a decisive step from exploration to production with the Final Investment Decision on its Mako Gas Project, booking reserves for the first time and progressing a major farm-down transaction.
- Final Investment Decision approved for Mako Gas Project
- Over US$280 million in capital contracts awarded, covering 80% of Capex
- First 1P and 2P reserves booked for Mako field
- Farm-down of 75% interest to PT Nations Natuna Barat advancing
- 500 sq km seismic program planned for Aceh PSCs in Q3 2026
Defining Milestone: Mako Project Moves to Development
Conrad Asia Energy Ltd (ASX:CRD) has marked a pivotal transition from exploration to development with the Final Investment Decision (FID) for its Mako Gas Project in the Duyung Production Sharing Contract (PSC). This move, announced in March 2026, confirms the company’s commitment to bring one of the largest gas discoveries in the region into production, targeting first gas in the fourth quarter of 2027.
The FID approval follows the completion of critical commercial, technical, and funding milestones, including the execution of a gas sales agreement and a farm-down deal with PT Nations Natuna Barat (NNB), a subsidiary of the Arsari Group. Under this arrangement, NNB will fund 75% of the development costs, carrying Conrad’s subsidiary West Natuna Exploration Limited (WNEL) through to production. The project is fully funded with a substantial contingency, and capital expenditure remains aligned with prior guidance.
By the end of Q1 2026, WNEL had issued letters of award exceeding US$280 million for key capital contracts, covering over 80% of the total Capex. These contracts include the drilling rig, subsea infrastructure (SURF), conductor support frame, and the Mobile Offshore Production Unit (MOPU) operations, signalling a rapid ramp-up in development activities.
Costs remain consistent with previous estimates, with total Capex to first gas pegged at US$320 million (100%), of which WNEL’s 25% share is approximately US$80 million. Operating costs are targeted between US$70-80 million annually, inclusive of pipeline transportation.
First Reserves Booking Highlights Asset Maturation
For the first time in its history, Conrad has recognised reserves on its balance sheet. Independent evaluator Gaffney Cline Associates reported 1P reserves of 20 million barrels of oil equivalent (mmboe) and 2P reserves of 29 mmboe net to Conrad based on its 76.5% participating interest at year-end 2025. This milestone underscores the maturation of the Mako asset and supports the company’s transition to a producing entity.
The Mako gas field contains an estimated 2P reserve of 330 billion cubic feet (Bcf) of gas (100% basis) and contingent resources of 12 Bcf, positioning it as a significant contributor to Indonesia’s domestic gas supply. The gas will be transported via a 59-kilometre pipeline to the Kakap PSC platform and onward to the Indonesian market through the West Natuna Transportation System (WNTS), with gas allocation and tariffs agreed with SKK Migas and the WNTS Joint Venture.
Farm-Down Progress and Cash Consideration Received
Conrad has advanced the farm-down of a 75% non-operated participating interest in the Duyung PSC to NNB. The company met all conditions precedent, triggering the receipt of the first US$5 million tranche of the agreed US$16 million cash consideration. Subsequent tranches are linked to regulatory approvals and commencement of commercial production.
The transaction structure will ultimately leave Conrad with a 22.875% operated effective interest in the Duyung PSC following completion of transfers from Coro Energy and Empyrean Energy, both of which have been settled or are pending regulatory approval. The company also resolved historic cash call disputes with Empyrean, further strengthening its financial and operational position.
This farm-down and funding arrangement is a critical enabler for Conrad, allowing the company to focus capital and resources on development while reducing balance sheet exposure. The drawdown of US$11.7 million from a carry loan facility during the quarter funded key pre-startup costs, including the MOPU and conductor support frame.
Seismic Program to Unlock Aceh Gas Potential
Beyond Mako, Conrad is progressing exploration and appraisal in its 100% owned Aceh PSCs, which cover approximately 20,000 square kilometres offshore Indonesia. The shallow-water blocks contain multiple gas discoveries and leads with a combined contingent resource estimate of 214 Bcf (gross) and a net present value of US$88 million attributable to Conrad.
A 500-square-kilometre 3D seismic acquisition program is planned to commence in Q3 2026 over the ONWA PSC, focusing on a cluster of three gas discoveries and six leads with historical exploration success rates near 70%. This program aims to refine subsurface understanding, quantify resource upside, and support future drilling and development planning, potentially including mini-LNG or power generation projects.
Conrad is actively engaging with potential equity partners for a minority, non-operated farm-in into its Aceh assets, reflecting growing interest driven by global energy market dynamics and the strategic importance of natural gas in Asia.
Strong Safety and Environmental Performance Maintained
The company reported zero fatalities, lost time injuries, or environmental spills during the quarter, reflecting disciplined operational planning and a commitment to safety culture. As operations scale, Conrad is enhancing risk management systems, contractor oversight, and environmental controls to meet increasing regulatory and stakeholder expectations.
Financially, Conrad ended the quarter with US$5.3 million in cash and reported related party payments of US$0.21 million, primarily director fees. The company’s cash position is supported by milestone payments and drawdowns under the carry loan facility, which will continue to fund development costs through to production.
Conrad’s Managing Director Miltos Xynogalas highlighted the strategic significance of the Mako FID and reserves booking, noting the company’s transition to a gas producer in a region where energy security and domestic supply are increasingly paramount. He described the next phase as one of growth and execution, with Conrad well-positioned to meet Asia’s rising gas demand.
The company’s progress builds on earlier announcements including the $320M Mako Gas Project funding and the US$5M milestone payment from the NNB farm-down.
Bottom Line?
Conrad Asia Energy’s shift from explorer to producer hinges on smooth execution of Mako development and farm-down completions amidst evolving regional gas demand.
Questions in the middle?
- How will regulatory approvals for the Empyrean and Coro interest transfers impact Conrad’s effective stake and project timelines?
- What are the prospects for securing equity partners for the Aceh PSCs amid shifting global energy market conditions?
- Can Conrad maintain capital discipline and operational momentum to meet the targeted first gas date in late 2027?