Empyrean Energy formalized a binding agreement with Conrad Asia Energy to resolve the dispute related to cash calls on the Duyung PSC project in Indonesia. The transaction allows the UK company to maintain its economic exposure to the Mako gas field without taking on new direct funding obligations.
Operational control of the Duyung PSC project
Based on the understanding reached, Empyrean will transfer its 8.5% interest in the Duyung PSC contract to West Natuna Exploration Limited(WNEL). In parallel, both companies will form a special purpose vehicle based in Singapore that will concentrate the shareholding structure and future economic relationship with the asset.
Under the agreed terms, the reorganization provides for the entry of a majority partner in the project. Following this farm-in, WNEL will retain a 25% interest in the Duyung PSC, while the new investor will assume operational control and most of the financial commitment of the development.
On the financial side, Empyrean will pay about $353,000 to Conrad as part of the initial settlement and an equivalent amount will be covered by dividends from the new corporate vehicle. These payments will settle all historical claims related to the dispute between the parties.
The company will also retain the right to receive 8.5% of the consideration paid to WNEL by the majority partner, maintaining an indirect exposure to the future value of the field. This structure allows Empyrean to benefit from the development of the field without stressing its balance sheet.
The agreement also includes the restructuring of Empyrean’s secured convertible bond, giving priority of collection to the lender over dividends generated by WNEL. Company management confirmed that discussions are progressing to close the definitive documentation.
Operationally, the new framework paves the way towards bringing the Mako gas field into production, with first gas expected in the fourth quarter of 2027. For Empyrean, closing this chapter frees up management resources and enhances its strategy of focusing on low-risk gas assets low risk gas assets in Asia-Pacific.
Source and photo: Empyrean Energy