Conrad Asia Energy has moved the US$320 million Mako gas project into full-scale fabrication after completing its 75% farm-down to Nations and securing a domestic gas sales route into Batam. The project remains fully funded, with first gas targeted for the fourth quarter of 2027, although Conrad’s cash position remains modest and further carry-loan drawdowns are expected.
- More than 90% of Mako capital contracts signed or awarded
- US$4 million second Nations farm-down payment received
- Mako capex held at US$320 million with funding and contingency intact
- Gas Sales Agreement with PLN EPI became effective in October
- Conrad ended September with US$6.65 million cash and US$15.95 million of borrowings
Mako moves from planning into fabrication
Conrad Asia Energy Ltd (ASX:CRD) has reached the point where Mako is no longer chiefly an engineering plan on paper. More than 90% of the project’s capital contracts are now signed or awarded, fabrication is under way and first gas remains targeted for the fourth quarter of 2027.
The company said the US$320 million development remains on budget and fully funded, including a substantial contingency. Conrad’s retained share of the development expenditure is expected to be about US$80 million, while future operating costs are estimated at approximately US$70 million to US$80 million a year across the project.
Farm-down completes funding framework
The quarter also formalised the transfer of a 75% non-operated participating interest in the Duyung Production Sharing Contract to PT Nations Natuna Barat, following approval from Indonesia’s Ministry of Energy and Mineral Resources. Conrad received the second US$4 million tranche of consideration after the remaining completion conditions were met, adding to the US$5 million received in March.
The transaction was designed to shift the bulk of Mako’s funding burden to Nations while leaving Conrad as operator. The company currently holds a 25% interest in Duyung, but expects that to fall to 22.875% once the remaining steps under its settlement with Empyrean Energy are completed. A revised reserves and resources statement is expected after that process concludes. The latest milestone builds on Conrad’s 75% Duyung farm-down, which had been reported as completed in September.
MOPU arrives in Indonesia as fabrication starts
The former Valaris 104 jack-up rig has been towed through the Strait of Hormuz and arrived at the PaxOcean yard in Batam, where it is being converted into Mako’s mobile offshore production unit. Topside module fabrication has begun, with a formal first-cut ceremony targeted for early November.
Conrad said the conductor support frame and subsea umbilical, riser and flowline packages are also on schedule. The first CSF steel is on site, its first beam fabrication began in September and SURF site fabrication is due to start in the middle of the fourth quarter. A contracted jack-up rig, the Admarine 502, is slated to drill six development wells and install the CSF.
Sales contract and Batam pipeline remove key delivery hurdles
Mako’s Gas Sales Agreement with PT PLN Energi Primer Indonesia became effective in early October after approval by PLN’s parent company. Under the agreement, PLN EPI will purchase all of Mako’s gas production.
The delivery route has also advanced. The WNTS-Pemping subsea pipeline was commissioned through a “Gas-In” process in early October, creating the connection for Mako gas to reach Batam through the West Natuna Transportation System. That infrastructure is intended to serve a domestic market where Conrad points to rising power demand, including from the data-centre sector. The development has now moved beyond its 90% contract award milestone, with the remaining test being physical execution rather than project approval.
Cash remains thin despite project funding
Conrad finished the quarter with US$6.65 million in cash after spending US$15.36 million on development assets and drawing US$18.97 million under the Carry Loan Agreement. Cumulative drawdowns reached US$63.79 million, but 75% of that amount was transferred to Nations when the farm-down completed, leaving US$15.95 million attributable to Conrad’s project vehicle.
The company expects to draw a further approximately US$10.75 million in the next quarter for its share of Mako development costs. That structure reduces the immediate need for an equity raise, but it also means the project’s financing position is tied to the carry-loan arrangements and future production revenues rather than a large corporate cash reserve.
Aceh assets move toward development decisions
Beyond Mako, Conrad and Aceh’s regulator BPMA have begun an evaluation of the Meulaboh and Singkil gas structures in the company’s two wholly owned Aceh PSCs. The process will assess resource potential, technical requirements and commercial viability before any decision on Plans of Development, with the parties discussing the potential completion of two PODs during 2027.
Conrad is also reviewing priorities for 3D seismic and near-field exploration drilling, while several potential equity partners have accessed a data room for a possible minority, non-operated farm-down of the Aceh assets. Those discussions could help define how much capital and management attention Conrad devotes to its second Indonesian gas portfolio while Mako moves through construction.
Bottom Line?
Mako now has a buyer, a commissioned delivery route and most major contracts in place. The next evidence of progress will come from MOPU conversion, remaining fabrication and the growing carry-loan balance before first gas.
Questions in the middle?
- Will the remaining Empyrean settlement steps be completed soon enough to confirm Conrad’s final 22.875% Mako interest and trigger a reserves and resources restatement?
- Can MOPU conversion, CSF and SURF fabrication remain on schedule without disturbing the US$320 million capex estimate?
- How will further carry-loan drawdowns and the proposed Aceh farm-down affect Conrad’s funding position before Mako begins generating production revenue?