Salamander 2011

completed

Salamander Energy plc (Salamander or the Company) is a rapidly-growing junior oil and gas company exclusively focused on Southeast Asia. The Company’s strategy is to build a sustainable upstream business through leveraging its regional knowledge and relationships; maintaining a balanced portfolio of production, development, appraisal and exploration of assets; enforcing strict capital allocation discipline; and pursuing targeted acquisitions in addition to organic-led growth. Since its foundation in early 2005, Salamander has developed a broad set of assets, although the proposed refinancing is restricted to the producing and near-production interests in Indonesia and Thailand. As of 1st January 2011, the Company reported net reserves of 66.3 million barrels of oil equivalent (boe) and average daily production of 20,300 boe. As with the 2008-2009 investments, the proposed refinancing is intended for the capital and operating expenditure needs of two existing Salamander-operated producing fields: (i) Glagah Kambuna – offshore north Sumatra, Indonesia. (ii) Block B8/38 Concession (Bualuang) - offshore Gulf of Thailand; Salamander also has minority interests (less than 10 %) in three fields operated by other companies but which are part of the borrowing base assets: (iii) E5-N and EU-1 Concessions - onshore northeast Thailand; (iv) ONWJ – offshore northwest Java, Indonesia; (v) SES – offshore southeast Sumatra, Indonesia; and The project will include the drilling of new wells in existing fields, the selective workover of existing wells and the construction of gas processing facilities and other field infrastructure. Salamander forecasts that the project will help it to increase its production to reach over 30,000 boe per day by 2013. The following sections provide an update on the operation of the Salamander operated properties since IFC’s 2010 disclosure. Operated Assets Kambuna - Indonesia Salamander now has 50% operatorship under a Technical Assistance Contract with Pertamina (the Indonesian oil and gas operator). Production commenced in August 2009 from a total of three offshore wells tied into an unmanned platform. No production processes, such as water separation, are undertaken on the platform. In 2009 Salamander completed construction of a pipeline (42km offshore / 15km onshore) from the wellhead to an onshore LPG asset and compressor station located on Pertamina’s existing Pangkalan Brandan facilities. Kambuna gas is exported south via the regional transmission system and is largely used for electrical power generation for Medan, Indonesia’s second largest city. Bualuang – Thailand Salamander now holds a 100% interest in the block and operatorship of the B8/38 Concession, the concession expires in 2025. Production patterns remain as described in the previous disclosure but a further phase of drilling on the field was completed in the first half of 2009, which included an exploration well, two horizontal producers and a water disposal well. The two horizontal production wells were tied into the production system and put on stream. Within the existing footprint, a further six wells are planned for first half of 2011 (Phase 5) with drilling of three new horizontal wells and the sidetracking of three existing vertical wells with horizontal sections. With the completion of the Phase 5 development drilling, an expansion of production facilities is required. At the time of IFCs 2011 supervision visit, Salamander was preparing for an additional two phases of development drilling, with plans for a second wellhead. Salamander will undertake an Environmental and Social Impact Assessment (ESIA) in compliance with Thai Legislation and consistent with Performance Standards requirements for the installation of the Bualuang offshore production platform and drilling of new wells not covered under the existing field ESIA.