Conrad locks in drilling rig for Mako gas field development

Conrad Asia Energy (ASX: CRD) has taken another step towards developing its flagship Mako gas field in Indonesia after executing a binding contract for an offshore drilling rig to support the project’s development program. The market’s responded positively, with shares jumping more than 20 per cent on the local market.

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The company announced its subsidiary, West Natuna Exploration Limited, has signed an agreement with PT Pertamina Drilling Services Indonesia through the PDSI-ADES Consortium for the provision of a jack-up drilling rig at the Duyung Production Sharing Contract in the Natuna Sea.

The contract secures the Admarine 502 rig, which will be used to drill six development wells and install the Conductor Support Frame required for the Mako project. The firm contract period is 180 days, with options available for extension, and drilling is expected to commence during the second quarter of 2027.

Management described the agreement as a critical milestone as the company moves from planning into execution of the Mako development.

The Mako project is one of the largest undeveloped gas discoveries in the region and forms the centrepiece of Conrad’s growth strategy. Initial development will comprise six production wells tied back to a leased Mobile Offshore Production Unit, with gas transported via a 59-kilometre pipeline into Indonesia’s domestic market.

The announcement provides investors with greater confidence around project timelines and execution, with key development contracts now beginning to fall into place ahead of final investment decisions and construction activities.

Conrad estimates total capital expenditure for first gas at approximately US$320 million on a 100% basis, with its 25% share equating to around US$80 million. The company has previously highlighted the project’s attractive economics and strategic location within a region experiencing growing demand for natural gas.

Managing director Miltos Xynogalas said securing a high-specification drilling rig on favourable terms positions the company to efficiently execute its upcoming drilling campaign.

Market sentiment around the announcement is likely to be positive, with investors generally viewing the award of major development contracts as an important derisking event. While first gas remains some distance away, the rig agreement demonstrates continued progress towards commercial production and reinforces management’s commitment to delivering the Mako project on schedule.

With drilling preparations advancing and development activities gathering momentum, investors will be watching for further project milestones as Conrad works towards bringing one of Southeast Asia’s largest undeveloped gas fields into production.

CRD last traded at $0.57 AUD/sh.

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