Canadian gas company CBM Asia Development Corp (CVE:TCF) is holding talks with US oil major Exxon Mobil Corporation (NYSE:XOM) over the formation of a joint venture partnership for the development of coalbed methane (CBM) projects in Indonesia.
The announcement from CBM Asia made no mention of financial terms. The final conditions of the planned farm-in deal are subject to the parties negotiating and signing formal agreements and obtaining government approvals, CBM Asia said.
The talks revolve around CBM production sharing contracts (PSCs) in the Barito and Kutai Basins. The companies are to split ownership in the PSCs equally.
The portion of the deal concerning the Barito Basin in South Kalimantan envisions CBM Asia buying between 35% to 37.5% in three existing PSCs. Additionally, the Canadian group will hold rights to purchase a 35% interest in one additional PSC that ExxonMobil may invest in. The prospective partners intend to launch some pilot well test programmes, with CBM Asia covering certain operating costs.
With regard to the Kutai Basin, the plan is for CBM Asia to obtain the right to farm into 50% of the future participating interest Exxon Mobil may purchase in certain CBM PSCs. Once Exxon Mobil acquires an interest in one or more PSCs in the Kutai Basin and the necessary conditions have been met, government clearance included, the US company will transfer half of its interest to CBM Asia.