Licence Details

Area: 4534 km²

Effective date: 30.12.2003.

Term: 30 years.

First Period Work Commitment: 2 Exploration wells + 200 km 2D seismic.

Interests:

   Salamander Bangkanai Energy  (Operator): 80.00%

   Bangkanai Petroleum (L) Berhad (Medco): 15.00%

   Mitra Energia Bangkanai (Sound): 5.00%

Contract Area History

The block is located onshore Kalimantan, Indonesia, over a NE-plunging spur of the Kutei Basin known as the Kerendan Depression. The area has been previously operated by Unocal who acquired a skeletal grid of 2D seismic data and drilled 7 exploration wells in the 1980s. Two gas wells and a well with gas shows were drilled to delineate the Kerendan gas field in the Oligocene Berai (Kerendan Limestone) Formation. Unocal was granted a POD by BPMigas, but relinquished the licence after failing to secure a gas sales agreement during the Indonesian financial crisis.

Development

A renewed Plan of Development (POD) for the Kerendan gas field was approved in July 2006 based on 133 Bscf sales to a new-build local integrated power plant. A gas sales and purchase agreement for this project was signed with state electricity company PT PLN on 28.06.2011 . First gas is targeted for mid 2013 in line with PLN's 'Crash Programme for 10,000 MW 2010-2014'.

An independent assessment of Kerendan Field contingent recoverable reserves and resources was undertaken by Fugro Robertson Limited in October 2011. Sound's net reserves and resources* based on this assessment are:

Exploration

Interpretation of a 205 km 2D seismic survey acquired in 2006 and 1980s legacy seismic data has identified a number of leads and prospects on the PSC. Prospectivity is recognised in the Oligocene Berai Formation, which is the productive horizon in the Kerendan gas field, together with deeper targets in the Eocene Tanjung Formation sandstone reservoirs.

A large structure (Kerendan Deep; P50 1825 Bscf*) has been defined below the existing Kerendan gas field at several levels in the Tanjung Formation. Cost-effective drilling of this prospect is to be by deepening of a planned development well close to the existing Kerendan-1 discovery well.

Other prospects include a Berai Limestone target considered as a satellite structure to the Kerendan field (West Kerendan; P50 101 Bscf*) and large faulted anticlinal structure prospective at multiple levels (Jupoi; P50 3450 Bscf*).

The PSC Operator has announced plans to drill two exploration wells commencing in late 2011.

Note: Resource estimates indicated by an asterisk (*) indicate that the figures are supported by a corresponding Competent Person's Report.