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(Sharecast News) - Empyrean Energy announced on Monday that it has finalised binding documentation to settle historical cash call arrears with Conrad Asia Energy and its subsidiary West Natuna Exploration (WNEL), clearing the way for its previously-announced farm-out relating to the Duyung production sharing contract and the Mako Gas Field in Indonesia.
The AIM-traded oil and gas group said the settlement agreement and a detailed shareholders agreement governing the ongoing relationship between the parties within a special purpose vehicle had now been executed.
It said the transactions remained subject to customary conditions precedent, including approval from Indonesia's Ministry of Energy and Mineral Resources.
With the settlement completed, Conrad had satisfied all conditions for the farm-out announced on 19 November last year to become effective, triggering an immediate cash payment of $5m to WNEL.
That represented the first instalment of the agreed $16m upfront consideration.
A further $4m would be paid to WNEL within 30 to 45 days, with the final $7m due on production, currently targeted for late 2027.
Under the agreement, Empyrean would be entitled to 8.5% of all cash payments made to WNEL.
The company said the conclusion of the agreements paved the way for a formal commitment to develop the Mako gas field and provided a stable and clearly-defined framework for participation in what it described as a high-quality gas development project.
"The focus, cooperation, and efficiency demonstrated by Conrad and Empyrean in recent weeks to conclude these agreements reflects the constructive and pragmatic relationship established between the parties," said interim chief executive Gaz Bisht.
"This farm-out transaction materially advances the Mako Gas Field development and represents a significant step toward achieving a Final Investment Decision.
"As noted by Conrad, significant procurement activity - fully funded under the previously announced carry loan agreement - is now underway, marking an important transition of the project toward the development and production phase.
"First production is anticipated to commence late next year, representing a major inflection point for all project participants.
"With the execution framework now firmly in place, the Mako project is positioned to progress in earnest, supported by clear alignment between Conrad and Empyrean.
"Having secured its ongoing participation in this strategically important asset, Empyrean is undertaking a disciplined evaluation of its broader portfolio to ensure that capital allocation and management focus remain directed toward assets with the strongest potential to deliver sustainable shareholder value.
"In parallel, the company continues to engage with industry participants to assess new growth opportunities consistent with its evolving strategy."
At 1143 GMT, shares in Empyrean Energy were up 7.24% at 0.08p.
Reporting by Josh White for Sharecast.com.