Andalas Energy and Power Plc, the AIM listed Indonesian focused oil and gas exploration company (ADL), is pleased to provide a corporate update, including a comment on developments in the Indonesian energy sector where the Company is looking to roll out its gas to power offering which it believes can make a significant contribution to the country’s power shortfall at the local level.
- President Widodo of Indonesia endorsed the construction of six mobile power plants at ground-breaking ceremony as Government of Indonesia looks to increase electricity capacity across the archipelago by 35,000 MW by 2019;
- Technical proposal for work programme to test the ABF at Tuba Obi East concession has been presented to Pertamina – with drilling contractors, potential locations and surveys all well advanced to allow immediate follow up once necessary work programme is approved;
- Election by several senior team members to receive a proportion of their fees in new ordinary shares of the Company at 0.2 pence per share, being the price of the recent placing representing a premium to 4 July 2016 closing share price of 19.4%
- Issue of further new ordinary shares pursuant to the arrangements with Corsair as described in the admission document dated 27 April 2016.
Andalas CEO, David Whitby, said: “Andalas is in the right place at the right time: Indonesia has multiple stranded gas discoveries; the country has a well-documented shortage of power; the government has set a target to add 35,000 MW of new capacity by 2019; and importantly the recent ground-breaking ceremony evidences that Indonesia recognises at the national and local level the contribution that small gas to power projects can make towards hitting this target.
“Since our readmission to AIM in May 2016 our team has been working hard to deliver against all aspects of our strategy to become an integrated gas to power producer, with a portfolio of interests that can yield significant value for shareholders. TOE is our first property, which will be advanced by the execution of our farm-in work programme, once necessary consents are received, and our internal and external team is standing by having fully cleared the way to execute.
“However our proposition does not stop there, we have always said that TOE is our first asset and our ambition is to repeat the Gas-to-Power proposition in other assets across Sumatra, therefore we continue to invest in our deep pipeline of opportunities and look to expand our opportunities as our proposition to solve the Indonesian Power crisis at the local level continues to gain traction with key and influential stakeholders in Indonesia. We believe we are entering an exciting period in the development of Andalas and, as the decision by senior team members to be paid in shares priced at a premium to the market shows, we are not alone.”
Gas to Power
The Government has set a target to supply 35,000 megawatts (MW) of new electricity capacity for Indonesia by 2019, equating to a 60% increase in total domestic power generation to alleviate the frequent power outages and gas shortages which hamper the country’s economic growth. In November 2015, PLN, the Indonesian state owned electricity distribution company, reported that it had signed power purchase agreements (PPAs) for a combined capacity of 9,403 MW or only 27% of the target.
To help achieve its target, the Government has been actively encouraging new players and promoting more open access to the gas and power markets. The Company is therefore pleased to note that in June President Joko ‘Jokowi’ Widodo attended a ground-breaking ceremony for six mobile power plants (MPPs) in Sumatra in Merwang Subdistrict, Bangka Regency, Bangka Belitung Province, with a total capacity of 350 MW. As noted by the President at the inauguration ceremony, a mobile power plant can be completed in six months compared to a power plant that uses coal which takes four to five years to build. MPPs can be executed in locations that have the greatest need and much faster than conventional power projects, which are both attractive characteristics for a Company like Andalas that wants to play an important role in helping the Government meets its targets.
The Company’s strategy is to capitalise on the skillset and experience of its Board and management team, which has made a significant contribution to the Indonesian gas and energy sector, to bring stranded gas assets into production via its gas to power proposition and in the process help close the shortfall in the country’s energy supply. Andalas believes its gas to power proposition continues to gain traction with local and national players and is encouraged by the progress being made during ongoing top level discussions with a number of relevant parties, particularly when set against the favourable regulatory backdrop and Government support.
Tuba Obi East (TOE)
The Company has delivered its presentation on the proposed work programme to test the Air Benekat Formation at TOE to PT Pertamina, the state owned energy company (“Pertamina”). Approval by Pertamina of the work programme is a priority for the coventurers and we will continue to update shareholders on progress. In parallel Andalas has advanced all other necessary work streams, including identifying two candidate locations, selecting the team, surveying the location, establishing necessary health, safety and environmental policies, which are all key in preparing for the execution of the work programme on a timely basis following Pertamina approval.
Issue of shares
A number of senior team members have elected to receive a proportion of their fees in new ordinary shares of the Company (“Employee Shares”) at 0.2 pence per share, being the price of the recent placing and representing a 19.4% premium to the closing price of Andalas’ shares as at 4 July 2016. In settlement of these fees the Company has therefore agreed to issue a total of 32,389,531 new ordinary shares for a total of £64,779.
Furthermore Andalas is to issue 631,982 shares under the Corsair settlement agreement (“Settlement Shares”), described in the admission document dated 27 April 2016. These shares represent the additional settlement consideration in respect of the 12,007,661 bonus warrant shares issued in early June. The 631,982 Settlement Shares shall be issued in equal proportions to David Whitby, Ross Warner, Simon Gorringe and Chris Newport.
The Company also had an obligation at readmission to AIM to issue 30,601,735 new ordinary shares in the Company under the Corsair arrangements described in the admission document dated 27 April 2016 to Chris Newport (“Newport Shares”). Chris has now elected to receive these shares, which he had originally elected to defer to a date of his choosing. The aforementioned shares are subject to lock-in as described in the admission document and represent the final obligations under the Corsair arrangements and as a result, Corsair has no ongoing relationship with the Company other than as a shareholder with a non-disclosable interest.
Following these issues of the Settlement Shares, the holdings of relevant Directors will be as follows:
|Director||Number of ordinary shares to be issued||Number of ordinary shares following the admission of the Settlement Shares||Percentage holding of enlarged share capital|
Admission and dealings
The aforementioned Employee Shares, Settlement Shares and Newport Shares will rank pari passu in all respects with the Company’s existing issued ordinary shares and will be equivalent to 2.5% of the enlarged issued share capital. Application has been made for the admission of the new ordinary shares to trading on AIM and it is expected that admission will occur and that dealings will commence at 8.00 a.m. on Friday 8 July 2016.
For the purposes of the Financial Conduct Authority’s Disclosure and Transparency Rules, the Company announces that following the issue of the new ordinary shares, the Company will have 2,493,167,975 ordinary shares in issue.
The Company has no ordinary shares held in treasury. The total number of voting rights in the Company will therefore be 2,493,167,975. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.
For further information, please contact:
|David Whitby||Andalas Energy and Power Plc||Tel: +62 21 2783 2316|
|Cantor Fitzgerald Europe
(Nominated Adviser and Joint Broker)
|Tel: +44 20 7894 7000|
|Peterhouse Corporate Finance
Limited (Joint Broker)
|Tel: +44 20 7469 0930|
|Colin Rowbury||Cornhill Capital (Joint Broker)||Tel: +44 20 7710 9610|
|St Brides Partners Limited
|Tel: +44 20 7236 1177
Tel: +44 7976 431608