Key Highlights

  • Indonesia's energy ministry approved the 75% Duyung PSC farm-down to Nations on 27 August 2026, and Conrad received the second cash tranche of US$4 million.
  • Over 90% of Mako capital contract commitments are signed or awarded, with total project cost unchanged at US$320 million and first gas targeted for the fourth quarter of 2027.
  • The Gas Sales Agreement with PLN EPI, covering 100% of Mako production, became effective in early October 2026.
  • Closing cash was US$6.65 million, and US$18.97 million was drawn under the Carry Loan Agreement during the quarter.

Conrad Asia Energy Ltd (ASX:CRD), through its subsidiary West Natuna Exploration Limited (WNEL), reported in its September 2026 quarterly activities report that the Mako Gas Project in Indonesia's Duyung Production Sharing Contract (PSC) has moved into full-scale fabrication. The company said the project remains on budget and on schedule for first gas in the fourth quarter of 2027. The quarter also brought completion of the farm-down of a 75% participating interest (PI) to PT Nations Natuna Barat, a subsidiary of PT Nations Petroleum.

Nations Farm-Down and Participating Interest

On 27 August 2026, Indonesia's Ministry of Energy and Mineral Resources approved the transfer of the 75% non-operated PI in the Duyung PSC to Nations. All other conditions were then met, including payment of US$4 million, the second tranche of cash consideration. The first tranche of US$5 million was received in March 2026. A third tranche of US$7 million is payable when commercial production begins, and the remainder will be paid from production revenues until 75% of past costs are recovered.

WNEL had earlier acquired 15% from Coro Energy plc, and on 23 July 2026 received approval for the transfer of Empyrean Energy plc's 8.5% interest, which briefly left WNEL with 100%. WNEL now holds 25%, which will fall to 22.875% once the final steps of the Empyrean settlement are completed, including the issue of an 8.5% equity interest in WNEL Holdings Pte Ltd to Empyrean. Conrad's beneficial interest in Duyung moved from 76.5% at 31 December 2025 to 25% at 30 September 2026.

Mako Construction Progress

Contracts or award letters now cover more than 90% of Mako's capital commitments, and several milestone payments have been made. The donor jack-up rig Valaris 104 was wet-towed through the Strait of Hormuz and arrived at the PaxOcean yard in Batam in early October for conversion into the mobile offshore production unit, which has a raw gas design capacity of 172 mmscfd. Fabrication of the topside modules has started, with a formal first cut ceremony targeted for early November.

For the conductor support frame, first steel shipments are on site and beam fabrication began on 14 September 2026. Subsea umbilical, riser and flowline work continues on schedule, with site fabrication starting in mid-fourth quarter 2026. The Admarine 502 jack-up is contracted for a firm 180 days to drill six development wells and install the frame.

Total capex to first gas stays at US$320 million for 100%, with WNEL's 25% share about US$80 million. The MOPU contract required a US$4 million donor rig purchase and a US$26 million equipment down payment, both within the previously announced provision of approximately US$35 million. Operating cost estimates are US$70-80 million per annum for 100%.

Gas Sales, Pipeline and Aceh Update

In early October, the Gas Sales Agreement with PT PLN Energi Primer Indonesia, which the purchaser of all Mako gas, became effective after all conditions precedent were met. Gas-In commissioning of the WNTS-Pemping subsea pipeline was also completed, giving Mako gas a delivery route to Batam.

In Aceh, Conrad holds 100% of the ONWA and OSWA PSCs, covering about 16,000 square km. Gross 2C Contingent Resources are 216 Bcf of sales gas, or 162 Bcf net to Conrad. In October, Conrad and regulator BPMA moved to accelerate evaluation of the Meulaboh and Singkil structures.

Closing cash was US$6.65 million, and related party payments were US$0.21 million. Drawdowns of US$18.97 million under the Carry Loan Agreement brought the cumulative total to US$63.79 million, of which US$47.84 million is allocated to Nations and US$15.95 million to WNEL.

Where the Quarter Leaves Conrad

Conrad ended the September quarter with the Nations transfer completed, a gas buyer and delivery pipeline in place, over 90% of Mako capital commitments contracted and project cost guidance unchanged at US$320 million. It also reported zero fatalities, zero lost time injuries and no environmental spills for the period.