GSS Energy suffered a big blow in its oil & gas business last year when an Indonesian client's contract with Pertamina was cancelled.
Its 1H2016 results saw no revenue contribution from the oil & gas sector.
|This award of joint operation with PT Pertamina EP is a significant development in our O&G segment. Our strategy for the O&G side is to build up a portfolio of assets and this is another step in that direction.”
-- Sydney Yeung, CEO of GSS Energy.
(NextInsight file photo)
In the meantime, GSS Energy negotiated with Pertamina to convert one of its four other oilfields -- Trembul -- to the standard joint operation contract (KSO, in Bahasa Indonesia “Kerja Sama Operasi").
This morning, GSS Energy announced the good news that its subsidiary, PT Sarana GSS Trembul, has been awarded an Operation Cooperation Contract from Pertamina for the Trembul area.
PT Sarana GSS Trembul is a 49-51% joint venture between GSS Energy and PT Sarana Pembangunan Jawa Tengah, a commercial vehicle wholly-owned by the provincial government of Central Java which holds stakes in various large-scale infrastructure projects in Indonesia.
In accepting the KSO offer, PT Sarana GSS Trembul has made an "opportunity cost payment" of US$0.5 million to Pertamina.
|Net asset value
|Source: Bloomberg, Company
According to a QPR conducted, Trembul area has a net substantial 24.32 million stock tank barrels of high estimate contingent resources, up to the depth of 800 metres.
Potential reserves beyond 800 metres depth have not been estimated yet.
Upon the acceptance of the KSO offer, PT Sarana GSS Trembul has started discussing and finalizing the formal agreement with Pertamina.
The oil & gas revival for GSS Energy is a boost to its fortune which thus far has held up because of the good performance of its precision engineering segment.
This was discussed in our recent article "GSS ENERGY: Precision engineering biz positive, O&G biz to revive".