Continental Energy Corporation (OTCBB: CPPXF) announced that it has purchased a 10% stake in Tawau Green Energy Sdn. Bhd. (“TGE“), a privately held company based in Kota Kinabalu, Sabah, Malaysia.
TGE is a geothermal energy developer. On November 29, 2011, TGE entered into a Renewable Energy Power Purchase Agreement (the “PPA“) with Sabah Electricity Sdn. Bhd. (“SESB“) to supply a capacity of 30 megawatts of electrical power to SESB’s East Coast Sabah power grid. SESB is a utility owned 80% by Tenaga Nasional Berhad, the federally owned electrical generation authority and utility of Malaysia and 20% by the State Government of Sabah. TGE is developing a volcano related geothermal resource known as “Apas Kiri” which is located in southern Sabah near the city of Tawau approximately 100 miles north of Continental’s Bengara-II oil and gas PSC in Indonesia.
TGE will build, own and operate the geothermal power plant and expects to construct it at an estimated total cost of 400 Million Malaysian Ringgit (“MYR“) (approximately US$ 133 Million). TGE plans to commission the plant by the end of 2014 and when completed, it will be Malaysia’s first power plant fired by a geothermal resource.
The PPA provides for a fixed purchase price by SESB of MYR 0.21 per kilowatt hour (approximately US$ 0.07) and a guaranteed off-take of all power the geothermal plant can produce for a fixed term of 21 years from first commercial operation. Over the 21 year life of the PPA, TGE expects to generate about US$ 328 Million in revenues at the PPA price. Additionally, TGE has applied for a Feed-In Tariff incentive from the Malaysian Government which if and when approved, would increase the overall revenue projection.
Richard McAdoo stated, “This acquisition of a 10% stake in TGE is a milestone event for Continental. It represents that all important, first big-step of our planned expansion into the renewable electrical power generation sector in a high growth region. The countries of Southeast Asia are all aggressively pursuing additional electrical power generation as the solid growth of their economies places unprecedented demand on current electrical generation capacity. As a result, clean, sustainable and renewable energy projects are generating major interest from regional financing sources and are attracting substantial investment incentives from the highest levels of government. The rapid and impressive track record of TGE in bringing the Apas Kiri geothermal project from concept to PPA is an excellent example of one of many attractive business opportunities available to innovative renewable and unconventional energy companies in Southeast Asia. We are extremely pleased to be joining TGE in this business venture and we are confident that our expertise in geological resource evaluation, risk management, and drilling will make a major contribution to TGE’s success.”
IR Hub / Discussion Forum