London listed company Coro Energy plc has acquired a 42.5% stake in the Lengo gas field offshore in East Java for around US$12 million. This the first acquisition by the United Kingdom’s based company in Indonesia .

The gas block is in the shallow water Bulu Production Sharing Contract (PSC) which contains the Lengo gas field. Coro said, the field development plan has been approved by the Indonesian authorities. The company targeting the Tuban industrial complex in East Java as the gas buyer for Lengo gas field.

Coro said, the regional gas prices currently in the range of US$5.50 to $8 per MMbtu. Its predicted the project will need costs $100 million.

Coro is stepping in to a deal that was originally agreed between New Zealand’ AWE (Satria) NZ Ltd, a subsidiary of AWE Limited and HyOil (Bulu) Pte. Ltd, a subsidiary of HyOil Pte. Ltd based in Singapore.

Coro, AWE and HyOil will be working together and with relevant government authorities to close these new agreements. Under these agreements, Coro will pay HyOil up to $4 million in Coro shares and will pay AWE a total of approximately $8 million in cash to cover the purchase price, cost reimbursement and other working capital adjustments.

As a result of these transactions, Coro will become a direct 42.5% holder of the Bulu PSC. The remaining 57.5% participating interest in the Bulu PSC is held between sole operator Kris Energy 42.5% and two local partners, Satria Energindo 10% and Satria Wijaya Kusuma 5%.

The Bulu PSC has a term of 30 years and is due to expire in October 2033. The PSC is located in water depths of approximately 60 meters. The Lengo gas field was discovered in 2008 by the Lengo-1 well which tested at a rate of 12.9 MMscfd and successfully appraised in 2013 located in Lengo-2 well which flow tested at over 21.2 MMscfd. A plan of development was submitted and approved in November 2014.