Empyrean Energy plc (AIM: EME) has announced a major milestone for the Mako Gas Field in Indonesia after completing the Nations farm-down transaction, which fully funds development and targets first gas in the fourth quarter of 2027.
Conrad Asia Energy and its subsidiary West Natuna Exploration Limited, operator of the Duyung Production Sharing Contract and Mako Gas Field, have completed the previously announced farm-down of a 75% non-operated participating interest to PT Nations Natuna Barat.
Completion has triggered a US$4 million payment from Nations, representing the second tranche of the US$16 million cash consideration. A further US$7 million is payable when commercial production begins.
More importantly for Empyrean, Conrad has confirmed that the transaction means Mako is now fully funded, with development activities already underway.
The introduction of Nations as a significant partner substantially reduces the funding requirements and development risk previously associated with Mako while allowing Empyrean to retain economic exposure to future production.
Empyrean retains 8.5% economic exposure
Under agreements reached with Conrad earlier this year, Empyrean is entitled to an 8.5% interest in WNEL Holdings, the special purpose vehicle through which its continuing economic interest in Mako will be held.
That arrangement entitles Empyrean to 8.5% of all cash payments received by WNEL, including revenues generated from Mako gas sales.
A key condition was approval from Indonesia’s Ministry of Energy and Mineral Resources, which has now been received.
With that approval secured, Empyrean said the remaining steps required to establish its 8.5% equity interest in WNEL Holdings are expected to be completed shortly, with no further government approvals required.
Empyrean is also working with Conrad to complete the final reconciliation under their Settlement Agreement, including payment of a previously announced US$353,388 cash call, alongside applicable taxes, costs and expenses.
As part of the wider restructuring of ownership in the Duyung PSC, Conrad has already acquired Coro Energy’s former 15% participating interest and Empyrean’s former 8.5% direct interest.
Following completion of the outstanding settlement arrangements and issuance of Empyrean’s 8.5% equity interest in WNEL Holdings, Conrad will retain a 22.875% operated participating interest in the Duyung PSC through its interests in WNEL.
Conrad is expected to publish an updated statement of reserves and resources following completion of the transactions.
Empyrean chief executive Gaz Bisht described completion of the Nations deal as a major milestone, highlighting that the structure provides funding certainty for Mako without requiring further equity funding from Empyrean for the project.
He said the arrangement represents a significant transformation in Empyrean’s position, giving shareholders exposure to a potentially material future cash-generating asset without the development funding burden that would otherwise have accompanied its participation.
With Mako fully funded, development underway and first gas targeted for Q4 2027, attention will now turn to completion of Empyrean’s 8.5% SPV interest and progress towards bringing the Indonesian gas field into commercial production.
