Andalas Energy and Power Plc Company Update
July 31 2017 - 2:00AM
UK Regulatory
TIDMADL
Andalas Energy and Power Plc
('Andalas', or the 'Company')
Company update
Andalas Energy and Power plc (AIM:ADL) is pleased to provide an operational
update on its strategy to develop a portfolio of 250MW to 500MW of wellhead
independent power projects ('IPPs') in Indonesia fired with gas from proven
fields and also to provide an update on its zero coupon loan note ('the Loan
Note') issued to Sandabel Capital L.P ('Sandabel').
Pertamina update
On 1 September 2016, Andalas announced a cooperation agreement with Pertamina,
the Global Fortune 500 national oil company of Indonesia, to commercialise gas
fields within Pertamina's acreage in Sumatra via the roll-out of the Company's
gas to power offering. Since then a number of projects have been subjected to
a vigorous selection, due diligence and evaluation exercise, resulting in the
identification of multiple proven fields within Pertamina's portfolio that are
suitable for gas-to-power development.
Andalas and Pertamina are now seeking to formalise the contractual framework
under which each proposed project can be developed, including specifics of the
power project development and the terms of the agreement.
PT PP Energi ("PPE")
On 17 July 2017, Andalas announced an agreement with PPE, the Indonesian
state-owned construction and engineering company, to jointly develop
independent power facilities in Indonesia. Andalas agreed to propose at least
three projects to PPE within three months of the agreement. The Company is
pleased to report that it has now presented the first project and both parties
have started the work necessary to evaluate the project and, subject to
negotiation, to establish a consortium agreement to develop the project.
New "fast power" opportunity
In the recently announced 2017 Republic of Indonesia's Electricity Supply
Business Plan ('RUPTL'), it was announced that mobile power plants are to be
deployed to deal with short-term shortages of power. In response to this and
in parallel with its core business of developing 30MW to 100MW independent
power projects, Andalas has identified a number of gas projects as part of its
work with Pertamina and other gas owners, that it considers to be potential
candidates to supply a short term mobile power plant development.
Three categories of gas field are being targeted:
* Smaller projects (circa 30BCF) that are considered too small for a long
term IPP development but are suitable for a shorter project life
* Producing gas fields with surplus uncontracted gas supply
* Oil fields where oil production is constrained by flaring consents
Andalas has started project feasibility work on two gas assets. If found
suitable, Andalas will look to propose a short-term power solution to the
state-owned electricity company, PLN. The potential projects must be near
existing gas supply and power infrastructure, located in a region with unmet
power demand and offer immediate cash flow potential. Andalas will act as
project developer and it has held conversations with a number of global
flexible power providers to provide the power plant, operating and maintenance
of any project under a tolling agreement.
Loan note update
Sandabel has agreed to extend the maturity date of the GBP550,000 Loan Note to 31
August 2017 ("the Maturity Date"). The fee associated with the extension is GBP
50,000, which will be repaid alongside the GBP550,000 loan note on or before the
maturity date. The Loan Note only becomes convertible into equity in the event
that the Loan Note is not repaid by the Maturity Date. All other terms of the
Loan Note (announced on 1 February 2017) remain unchanged. In addition
Sandabel has been issued with 150,000,000 3 year warrants at a strike price of
0.1pence per share, representing a 38% premium to the closing share price.
David Whitby, CEO of Andalas Energy & Power, commented: "We believe that our
ability to identify competitive sources of gas, creates multiple opportunities
in the power market in Indonesia. We continue to make progress with Pertamina
towards our goal of delivering our first project. At the same time, we
continue to seek other ways to create value for shareholders and the 'fast
power' opportunity has the potential to do just that. By adopting the supplier
tolling model there will be negligible capital investment required to bring any
future project into production, and therefore 'faster power' projects provide
scope to bring forward first revenues for Andalas without the need for
shareholder dilution.
"As was the case when the Board of Directors participated in the recent
placing, the extension of the loan note provides the Company with additional
flexibility at a time when we are seeking to deliver on the multiple objectives
that we have been working on since signing our agreement with Pertamina. I
look forward to providing further updates on our progress."
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ('MAR). Upon the publication of this announcement via a
Regulatory Information Service ('RIS'), this inside information is now
considered to be in the public domain.
**ENDS**
For further information, please contact:
David Whitby Andalas Energy and Power Plc Tel: +62 21 2783 2316
Sarah Wharry Cantor Fitzgerald Europe Tel: +44 20 7894 7000
Craig Francis (Nominated Adviser and Joint Broker)
Jon Belliss Beaufort Securities Limited Tel: +44 20 7382 8415
(Joint Broker)
Frank Buhagiar St Brides Partners Limited Tel: +44 20 7236 1177
Susie Geliher
END
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