LONDON (ShareCast) - (Sharecast News) - Andalas Energy and Power updated the market on its proposed acquisition of an interest in the Bunga Mas production sharing contract (PSC) on Monday, which it had initially announced on 29 August last year.
The AIM-traded firm noted that the long stop date for fulfilment of the conditions precedent to the sale and purchase agreement expired on 15 February, and the parties had not extended it.

It said the vendor had advised it that the Government of Indonesia had said that it intended to issue a letter terminating the PSC this week.

If, as is expected, the government issued the termination letter, Andalas would terminate the sale and purchase agreement.

As it advised on 12 February, the Government had asked the PSC contractors to deposit sums into an escrow account and lodge performance bonds as a condition of renewal of the PSC.

The escrow sum was understood to be around $5.8m, and the contractors had not satisfied that request.

Andalas said it had concluded that it would not be in its best interests to seek to raise funds sufficient to fulfil those requirements.

As it had previously indicated, to date Andalas had incurred direct costs of an estimated £0.2m of legal, professional and other direct costs in connection with Bunga Mas.

"We are disappointed by the recent developments at Bunga Mas," said Andalas chief executive officer Simon Gorringe.

"We could not ask shareholders for the funds to lock up $6m in addition to the capital required to develop the field."

However, Gorringe said Andalas would only terminate the agreement when it was certain that the licence had been terminated by the Government of Indonesia.

"Colter is currently drilling, and we look forward to providing shareholders with further news in the coming weeks both on Colter and the company's interest in Badger."

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