Serica Energy to sell assets in Indonesia for US$35 million

LONDON, England - Serica Energy PLC (TSX:SQZ) has agreed to sell its Indonesian subsidiary to Pace Petroleum for about US$35 million.

The transaction will include its 25 per cent interest in the Kambuna field as well as the 30 per cent interest in the Kutai exploration block offshore East Kalimantan, and a full interest in the East Seruway block offshore North Sumatra.

The company said Thursday that the transaction will include $33 million in working capital, with an additional payment of $2 million based on the outcome of the Kambuna No. 5 well that is scheduled for drilling later in the year.

Certain oilfield equipment is not included in the pricetag, and will be kept by Serica, it noted.

The agreement still faces approval from GEMS and Serica's board members.

Serica had announced plans to review its Indonesian assets last November.

Chairman Tony Craven Walker noted that money for the transaction is being provided through a new resources fund that's still being finalized by GEMS, an Asian Private Equity Group based in Hong Kong.

"We have received written confirmation from GEMS that they expect completion of a fundraising in July and the transaction to complete expeditiously thereafter," he said in a prepared statement ahead of Serica's annual meeting Thursday.

However, Walker noted that it's still possible that funding could fall through, and in those circumstances the company would reopen talks with other interested buyers.

"But we will also be looking at the possibility of retaining our Kambuna production which has been performing well and benefitting from recent high oil prices," he added.