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.
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
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 £550,000 Loan Note to 31 August 2017. The fee associated with the extension is £50,000, which will be repaid alongside the £550,000 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.
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|
|Jon Belliss||Beaufort Securities Limited
|Tel: +44 20 7382 8415|
|St Brides Partners Limited||Tel: +44 20 7236 1177|