Hong Kong-based Energy World Corporation (ASX: EWC) is anticipating an increase in gas production from its Sengkang production sharing contract (PSC) in Indonesia following the installation of a new compressor package.
The liquefied natural gas (LNG) developer today released its preliminary full year results for the 2018 financial year, attributing the 9.1% fall in gross profit to US$98.6 million to decreased gas production from the onshore project.
“Decreased [sales] volumes were a result of decreased flow rates at the Kampung Baru wells,” Energy World reported.
“While this had not had a significant impact on operations, new compressors have been ordered to increase gas pressure going forward and thus to increase gas sales,” it said.
According to the company, the compressors are currently on a ship in transit to Indonesia.
Consolidated group revenue also dropped 11% to US$158.2 million compared to the 2017 financial year.
However, this was outweighed by a 13.9% decrease in cost of sales, resulting in an improved gross profit percentage. This was due to management implementing cost reduction strategies across its operating business, Energy World said.
Sengkang extension reports
The company today also released a statement regarding recent rumours that a 20-year extension had been granted for its wholly-owned Sengkang Block in South Sulawesi.
Indonesian news agency Antara reported over the weekend that the nation’s energy and mineral resources ministry had extended the PSC beyond its 2022 expiry for two more decades.
According to Antara, Energy World’s subsidiary and current Sengkang operator, Energy Equity Epic (Sengkang) Pty Ltd, has paid Indonesia a $10 million signature bonus in addition to making a $60 million definite work commitment for the block’s extension.
In today’s ASX statement, Energy World said it would provide an update to shareholders on the status of the Sengkang PSC “if and when we are able to do so”.
The company submitted its formal application for the extension with Indonesian energy regulator SKK Migas and said it has been “working closely with them over the last few months”.
In its 2018 preliminary final report, Energy World said current Indonesian policy indicates that any extension would likely require involvement of a local partner.
“Whilst timelines are unclear, we are optimistic that an outcome can be reached before the end of 2018,” the company reported.
In Australia, the company reported an 80% increase in oil and gas revenue to US$839,000.
Energy World holds a 33.33% stake in the Southern Cooper Basin coal seam gas project in South Australia, where operator Strike Energy (ASX: STX) is currently undertaking a multi-stage fracture stimulation program at the Jaws-1 appraisal well.
Last week, Energy World also announced it had secured up to AUD$2 million in funding under the Australian Government’s Gas Acceleration Program.
The funding will be used to fast track the recommissioning of its wholly-owned Eromanga and Gilmore gas fields in Queensland, which have been under care and maintenance since 2001.
Energy World shares climbed more than 23% to a high of $0.185 by afternoon trade and closed the day up 13.33% at $0.17.