Company description: Oil & gas dominates
Ramba Energy comprises two main business units: Richland Logistics, a provider of logistics solutions across the Asia Pacific region, including warehousing, terminal handling and project logistics; and Ramba oil & gas, an E&P company based solely in Indonesia, with three onshore licences, Lemang (31% WI, post-approval and completion of farm-out), West Jambi (100% WI) and Jatirarangon (70% WI).
Ramba Energy, focused on upstream in Indonesia
Ramba oil & gas consists of three key licences, as shown in Exhibit 1. All three are located in Indonesia: Jatirarangon (70% WI), West Jambi (100% WI) and Lemang (31% WI, post-approval and completion of farm-out). Key assets in these licences are a mature production asset at Jatirarangon, a development asset in the Lemang block (Akatara) and a high number of pure exploration prospects at West Jambi.
The immediate focus of the company’s attention is the development of the Akatara field. Akatara is the group’s core asset and is located in the Lemang block (shown in Exhibit 2). Ramba announced that it had received approval for its fast-track development plan at Akatara on 10 August 2015 and subsequently farmed out a 20% working interest (subject to approval and completion) in the field to fund its part of the field’s development. The development plan approved in August involves drilling a further 10 wells at Akatara, although with the installation of an early production facility connected to the three worked-over discovery wells, the group expects to be in production by H116, enabling the bulk of development to be funded from the resultant cash flow. Of note is the Akatara field’s $50m (gross) cost recovery pool, representing exploration spend on the asset thus far.
Exhibit 1: Indonesia, upstream focus
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Exhibit 2: Lemang block, key discovery, Akatara
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Exhibit 1: Indonesia, upstream focus
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Exhibit 2: Lemang block, key discovery, Akatara
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Core asset Akatara: A quick recap of the history
The Akatara field was discovered by Ramba oil & gas in 2012 after the group drilled three successful wells: Akatara-1, Akatara-2 and Selong-1. The three wells separately discovered oil, gas and condensate. Individual test rates from the three wells are shown in Exhibit 3; the combined flow rate from the three wells reached 9,522boe/d. Individually, the wells demonstrated a significant degree of variability. As a channel sand reservoir, the variable output is likely driven by intercepted sand thickness and localised connectivity. Of note is the high oil production observed from the Akatara-2 well, where it intersected three producible horizons.
Exhibit 3: Akatara well test summary
Date |
Well name |
Gas (mmscf/d) |
Oil (b/d) |
Boe/d |
December 2012 |
Selong-1 |
16.8 |
790 |
3,853 |
May 2013 |
Akatara-1 |
11.0 |
380 |
2,385 |
February 2014 |
Akatara-2 |
5.4 |
2,300 |
3,284 |
Total |
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33.2 |
3,470 |
9,522 |
The crude oil produced at Akatara exhibited a wide range of gas-oil ratios (GOR) varying from 785 to 6,300scf/bbl at Akatara-2, which accounts for the varying gas production rates observed from each well. The Akatara reservoir itself has shown to be highly producible, exhibiting high porosity and permeability, with the drainage radius of some wells being as much as 1.5km, as observed in testing. This high deliverability is a marked commercial benefit for Akatara in reducing the number of development wells, and hence development capex, ultimately required to fully exploit the field. This is reflected in the development plan approved by the Indonesian government, key components of which are described below.
Fast-track development plan approved for Akatara, first production 2016
Based on the success of the three exploration wells shown in Exhibit 3, the government of Indonesia mandated that Ramba move from an exploration phase to development of the Akatara structure. The fast-track development plan for Akatara received government approval in August 2015. As part of working up a development plan for Akatara, Ramba commissioned a new CPR covering all three of its Indonesian blocks; this was carried out by RISC in April 2014. As part of this study, RISC assessed mid-case prospective recoverable resources at Akatara of 52mmbbl of oil and 129bcf of gas.
Akatara development plan, key elements of Phase 1 development
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Workover of three existing discovery wells.
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Drill eight additional development wells.
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Drill two injection wells used for pressure maintenance.
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Installation of an early production facility (EPF); unit to be rented for four years.
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Crude oil export via trucking to SPU Tempino (140km away/c 54 trucks at plateau).
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Four well pads to be established: A (four wells), B (four wells), C (three wells), D (two wells).
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Associated gas is to be used as engine fuel initially. Non-associated gas will be produced from two dedicated development wells, to be drilled in 2016, with an estimated 4.1mmcf/d plateau rate to be maintained for nine years.
Exhibit 4: Akatara field development schedule
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Beyond the initial fast-track development (Phase 1) shown in Exhibit 4 above, Ramba is to undertake a field performance study (timeline shown in Exhibit 4) aimed at determining the key required components of a permanent development (Phase 2). Priorities of the field performance study are the permanent facility design and optimisation of the transportation scenario. During Phase 1 an estimated 54 trucks will be required to transport the crude production 140km from the Lemang block to the receipt terminal at SPU Tempino. The company anticipates that in Phase 2 there is potential for a cheaper export route than via trucking to Tempino, such as pipeline export to a closer terminal depending on the fields’ ultimate production potential.
Phased development at Akatara is the right move considering reserves uncertainty
In our view, Ramba’s development of Akatara via a phased development schedule is well advised. Despite the three exploration wells having been drilled in the field so far, the Akatara field still has a wide range of possible reserves: 7.2mmbbl (P90 oil only) to 195mmbl (P10 oil only). This is due to the irregular location, distribution and connectivity of the reservoirs that comprise the structure.
Given this compartmentalisation, irregular reservoir distribution and limited number of wells, it is accepted that the structure would benefit from further appraisal. In our view, the eight further development wells and two injection wells, planned as part of the approved Phase 1 development, will serve to appraise the areal extent and true productive potential of the Akatara field. Based on the results of these wells, we highlight the potential to increase estimated resources at Akatara towards the high-case estimate of 195mmbbl of oil and 350bcf of gas, from the current mid-case estimate of 52mmbbl oil and 129bcf gas on which our field economics are based.
Ramba and Eastwin’s farm-out to Mandala secures funding for both parties
On 4 October Ramba announced it had reached an agreement with Mandala to farm out a 35% working interest jointly with its partner in Lemang, Eastwin Global Investments. Mandala is a South-East Asia-focused oil and gas exploration and production company backed by leading global investment firm KKR. Mandala is led by an executive management team of three highly experienced, technically based co-founders with more than 75 years of combined experience in oil and gas operations who have spent the majority of their careers in South-East Asia. KKR partnered with Mandala in early 2015 to bring complementary technical and financial capability to regional independent and national operators across the exploration, development and production spectrum to drive portfolio growth and maximise asset potential.
As part of the farm-out agreed with Mandala, Ramba will pass on a 35% working interest in the Lemang block, 20% from its own holding and 15% to be passed on following acquisition from partner, Eastwin (Sugih). Post-transaction, working interests in the Lemang block will be as follows: Ramba 31%, Eastwin (Sugih) 34% and new entrant Mandala 35%. Key parameters of the deal (based on 20% farm-out) are as follows:
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$15m Initial cash payment, including a $5m advance;
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payment in respect of Ramba’s incurred costs between the agreement date and completion;
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reserves bonuses of up to $68m based on estimated 2P recoverable volumes;
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natural gas reserve bonuses of $10m based on 2P recoverable volumes;
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commercial discovery bonus of US$4.8m; and
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a $1.6m financial carry in each of up to three wells in the Lemang block.
The farm-out deal is beneficial for Ramba and Eastwin (Sugih), which receives the same terms for the 15% working interest it is selling to Mandala as Ramba.
Lemang exploration; Wajik to be targeted in 2017, Ampyang & Sagon to follow in 2018
As part of the farm-out deal with Mandala, Ramba will be carried for up to $1.6m per well for its share in up to three exploration wells in the Lemang block, beyond appraisal to the Akatara field. Of the 10 exploration prospects at Lemang outlined by DeGolyer and MacNaughton (D&M) in the 2011 CPR, Ramba has selected the Wajik prospect as the next target to be drilled following full appraisal and development at Akatara. Currently the group expects to drill the Wajik prospect by 2017, with two further exploration wells to be drilled in 2018. Targets for the 2018 wells are yet to be finalised from the potential list, highlighted in Exhibit 5 below, although we would expect Ampyang and Sagon to take priority as they represent oil targets.
Exhibit 5: D&M 2011 CPR, Lemang prospectivity as assessed in 2011
No. |
Prospect |
Prospective hydrocarbon |
Mean estimate (mmbbl) |
High estimate (mmbbl) |
GCoS % |
1 |
Wajik |
Oil |
323 |
583 |
27 |
2 |
Ampyang |
Oil |
34 |
60 |
26 |
3 |
Sagon |
Oil |
6 |
10 |
16 |
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Prospective hydrocarbon |
Mean estimate (bcf) |
High estimate (bcf) |
GCoS % |
4 |
Arem Arem |
Gas |
86 |
193 |
20 |
5 |
SMD-1 |
Gas |
239 |
539 |
17 |
6 |
CMP-1 |
Gas |
22 |
39 |
17 |
7 |
Ampyang |
Gas |
73 |
130 |
23 |
8 |
Sagon |
Gas |
34 |
59 |
11 |
9 |
Wajik |
Gas |
15 |
30 |
15 |
Source: DeGolyer and MacNaughton
D&M CPR highlights the significant potential at Wajik
In a follow up to D&M’s analysis in 2011, RISC carried out a further CPR on behalf of Ramba in 2014, analysing the Wajik prospect in detail. The group assessed three prospective horizons at Wajik: UTAF, LTAF and GUF as offering a combined 98mmbbl of prospective resource potential.
Exhibit 6: Wajik exploration prospect, RISC CPR highlights three potential horizons
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STOIIP (mmbbl) |
Resources (mmbbl) |
Trap (%) |
Reservoir (%) |
Seal (%) |
Source (%) |
GCoS (%) |
UTAF |
107 |
23.7 |
70 |
80 |
30 |
75 |
13% |
LTAF |
148 |
33.0 |
70 |
80 |
30 |
75 |
13% |
GUF |
185 |
41.0 |
70 |
80 |
65 |
65 |
24% |
Total |
440 |
97.7 |
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Source: RISC April 2014 CPR
The key reservoir issues affecting Akatara are also thought to be present in Wajik, ie the main reservoirs, the UTAF and LTAF and further reservoir Gumai (GUF), are expected to be thin stacked sand sections with uncertain connectivity. However, as a distinct positive – unlike Akatara – all three reservoirs at Wajik are assessed as prospective for oil.