Inpex farming into Seascape’s exploration block offshore Malaysia

Japan’s energy company Inpex Corporation has inked a share sale and purchase agreement (SSPA) with Seascape Energy, a Southeast Asia-focused E&P player, to acquire a participating interest in a production sharing contract (PSC) off the coast of Sarawak, Malaysia from the latter’s subsidiary, Longboat Energy (2A) Limited.

Under the deal, Inpex will get the entire 42.5% participating interest Seascape’s affiliate holds in the Block 2A PSC. The Japanese firm will assume operatorship of the block, with Seascape retaining a 10% interest through another subsidiary, Topaz Number One Limited.

According to the E&P company, the transaction entails full, uncapped carry for its retained interest through the remaining exploration phase which includes one firm wildcat well and one contingent appraisal well, subject to a commercial discovery. The firm is set to receive $10 million payable in full at transaction completion, a further $10 million payable on a commercial discovery, and Inpex will reimburse $0.5 million of historic costs.

Block 2A is located in the North Luconia hydrocarbon province covering approximately 12,000 square kilometers in water depths between 100 and 1,400 meters. It contains the Kertang prospect, whose giant scale was confirmed in late June. According to a competent person report (CPR), the prospect contains 9.1 trillion cubic feet (TCF) of unrisked mean prospective resources, combined with 146 million barrels (mmbbl) of natural gas liquids (NGLs) across its four target horizons. 

“The successful farm-out of Block 2A marks an important turning point for Seascape Energy Asia following its strategic pivot in the middle of 2024. Attracting a high-quality partner into the world-class Kertang prospect, alongside the recent award of 12 gas discoveries in the DEWA PSC, highlights the vital role that nimble, forward thinking, independent E&P companies have to play in the Southeast Asian upstream ecosystem,” noted Nick Ingrassia, CEO of Seascape. 

“The commercial terms of the transaction allow Seascape to retain material exposure to the significant upside associated with drilling the 9 TCF Kertang prospect at nil ongoing cost while also providing capital to be reinvested into the business – including bringing the DEWA cluster through to development.”

The block was originally awarded to Seascape in February 2023 as part of the Malaysian Bid Round 2022 (MBR 2022) by Petronas Malaysia Petroleum Management (MPM). Inpex also secured two offshore hydrocarbon exploration licenses offshore Sarawak during that bidding round – deep water Block 4E and shallow water Block SK418.

The transaction, which is subject to partner and regulatory approvals, including that by Petronas, is anticipated to be finalized at the end of Q1 2025. Following completion, partners in the PSC will be Inpex (42.5%), Petronas (40%), Topaz Number One Limited (10%), and Petroleum Sarawak Exploration & Production (PSEP) (7.5%).

Seascape sees the farm-out as an important milestone in its transformation into a fully funded, Southeast Asian-focused E&P business. The firm intends to continue pursuing opportunities in Malaysia and seek additional opportunities across Southeast Asia, which it considers “an active and attractive destination for upstream investment.”

The firm recently won the DEWA complex cluster small field asset production sharing contract (SFA PSC) as part of Malaysia Bid Round Plus (MBR+) with partners EnQuest Petroleum Production Malaysia and PSEP. DEWA is said to comprise 12 gas discoveries in shallow water (40–50 meters) near existing infrastructure, located approximately 50 kilometers off the coast of Sarawak.

Meanwhile, Inpnex’s affiliate Inpex Browse won a license for a block off the northern coast of Western Australia as part of the country’s 2022 offshore petroleum exploration acreage release. The firm will hold a 100% working interest and act as the operator of release area AC22-1, now named AC/P71. The block covers approximately 920 square kilometers, in water depths of 100–300 meters.