Andalas Energy and Power Plc Company Update

 
TIDMADL 
 
Andalas Energy and Power Plc 
 
                         ('Andalas', or the 'Company') 
 
                                Company update 
 
Andalas Energy and Power plc (AIM:ADL) is pleased to provide an operational 
update on its strategy to develop a portfolio of 250MW to 500MW of wellhead 
independent power projects ('IPPs') in Indonesia fired with gas from proven 
fields and also to provide an update on its zero coupon loan note ('the Loan 
Note') issued to Sandabel Capital L.P ('Sandabel'). 
 
Pertamina update 
 
On 1 September 2016, Andalas announced a cooperation agreement with Pertamina, 
the Global Fortune 500 national oil company of Indonesia, to commercialise gas 
fields within Pertamina's acreage in Sumatra via the roll-out of the Company's 
gas to power offering.  Since then a number of projects have been subjected to 
a vigorous selection, due diligence and evaluation exercise, resulting in the 
identification of multiple proven fields within Pertamina's portfolio that are 
suitable for gas-to-power development. 
 
Andalas and Pertamina are now seeking to formalise the contractual framework 
under which each proposed project can be developed, including specifics of the 
power project development and the terms of the agreement. 
 
PT PP Energi ("PPE") 
 
On 17 July 2017, Andalas announced an agreement with PPE, the Indonesian 
state-owned construction and engineering company, to jointly develop 
independent power facilities in Indonesia.  Andalas agreed to propose at least 
three projects to PPE within three months of the agreement. The Company is 
pleased to report that it has now presented the first project and both parties 
have started the work necessary to evaluate the project and, subject to 
negotiation, to establish a consortium agreement to develop the project. 
 
New "fast power" opportunity 
 
In the recently announced 2017 Republic of Indonesia's Electricity Supply 
Business Plan ('RUPTL'), it was announced that mobile power plants are to be 
deployed to deal with short-term shortages of power.  In response to this and 
in parallel with its core business of developing 30MW to 100MW independent 
power projects, Andalas has identified a number of gas projects as part of its 
work with Pertamina and other gas owners, that it considers to be potential 
candidates to supply a short term mobile power plant development. 
 
Three categories of gas field are being targeted: 
 
  * Smaller projects (circa 30BCF) that are considered too small for a long 
    term IPP development but are suitable for a shorter project life 
  * Producing gas fields with surplus uncontracted gas supply 
  * Oil fields where oil production is constrained by flaring consents 
 
Andalas has started project feasibility work on two gas assets.  If found 
suitable, Andalas will look to propose a short-term power solution to the 
state-owned electricity company, PLN.  The potential projects must be near 
existing gas supply and power infrastructure, located in a region with unmet 
power demand and offer immediate cash flow potential.  Andalas will act as 
project developer and it has held conversations with a number of global 
flexible power providers to provide the power plant, operating and maintenance 
of any project under a tolling agreement. 
 
Loan note update 
 
Sandabel has agreed to extend the maturity date of the GBP550,000 Loan Note to 31 
August 2017 ("the Maturity Date").  The fee associated with the extension is GBP 
50,000, which will be repaid alongside the GBP550,000 loan note on or before the 
maturity date.  The Loan Note only becomes convertible into equity in the event 
that the Loan Note is not repaid by the Maturity Date.  All other terms of the 
Loan Note (announced on 1 February 2017) remain unchanged.  In addition 
Sandabel has been issued with 150,000,000 3 year warrants at a strike price of 
0.1pence per share, representing a 38% premium to the closing share price. 
 
David Whitby, CEO of Andalas Energy & Power, commented: "We believe that our 
ability to identify competitive sources of gas, creates multiple opportunities 
in the power market in Indonesia.  We continue to make progress with Pertamina 
towards our goal of delivering our first project.  At the same time, we 
continue to seek other ways to create value for shareholders and the 'fast 
power' opportunity has the potential to do just that. By adopting the supplier 
tolling model there will be negligible capital investment required to bring any 
future project into production, and therefore 'faster power' projects provide 
scope to bring forward first revenues for Andalas without the need for 
shareholder dilution. 
 
"As was the case when the Board of Directors participated in the recent 
placing, the extension of the loan note provides the Company with additional 
flexibility at a time when we are seeking to deliver on the multiple objectives 
that we have been working on since signing our agreement with Pertamina.   I 
look forward to providing further updates on our progress." 
 
The information contained within this announcement is deemed by the Company to 
constitute inside information as stipulated under the Market Abuse Regulations 
(EU) No. 596/2014 ('MAR).  Upon the publication of this announcement via a 
Regulatory Information Service ('RIS'), this inside information is now 
considered to be in the public domain. 
 
                                   **ENDS** 
 
For further information, please contact: 
 
David Whitby    Andalas Energy and Power Plc           Tel: [phone] 
 
Sarah Wharry    Cantor Fitzgerald Europe               Tel: [phone] 
Craig Francis   (Nominated Adviser and Joint Broker) 
 
Jon Belliss     Beaufort Securities Limited            Tel: [phone] 
                (Joint Broker) 
 
Frank Buhagiar  St Brides Partners Limited             Tel: [phone] 
Susie Geliher 
 
 
 
END 
 

(END) Dow Jones Newswires

July 31, 2017 02:00 ET (06:00 GMT)