Seascape Energy Asia (LON:SEA) has made a significant leap forward with the successful completion of a transformational farmout deal with Japan’s Inpex Corporation, a move that bolsters its financial position and future exploration potential. The agreement, which sees Seascape farming out a 42.5% stake in its Malaysian Block 2A asset, is valued at up to US$38 million—approximately 1.3 times Seascape’s current market capitalisation.
This landmark transaction brings in an immediate US$10 million cash payment, alongside the reimbursement of US$1 million in historic costs. Importantly, Seascape also retains a 10% stake in the block, with the benefit of a fully uncapped carry through the exploration phase. This includes the drilling of the high-impact Kertang prospect, offering significant upside exposure at no cost.
Inpex’s involvement not only validates the potential of Block 2A, but also brings deep operational expertise. As Japan’s largest oil and gas company, Inpex operates in 20 countries and boasts 2P reserves of 6.2 billion boe. Its existing presence in Malaysian waters opens the door for operational synergies, particularly in the Sarawak region.
James McCormack, Director of Research at Cavendish, noted the significance of the agreement:
“The farmout transforms Seascape into a fully funded SE Asian focussed E&P business with a balanced portfolio of discovered resources on the DEWA PSC and high-impact exploration associated with its retained interest in Block 2A.”
Block 2A, located offshore Sarawak, contains the Kertang prospect—described by Cavendish as an “undrilled giant” with gross unrisked mean prospective resources of 9.1 trillion cubic feet (Tcf) of gas and 146 million barrels of NGLs. For Seascape’s 10% stake, this equates to nearly 1 Tcf of gas and 14.6 million barrels of NGLs, providing considerable resource exposure.
Cavendish maintains its target price of 85p, representing an upside of over 140% from the current share price of 34.5p. On an unrisked basis, the net asset value reaches as high as 2,460p per share, underscoring the vast long-term potential should Seascape successfully advance and de-risk its portfolio.
Thoughts
This deal marks a turning point for Seascape Energy Asia, positioning it strongly in a region poised for growth in natural gas demand. With strategic partners, robust financial support, and high-impact exploration upside, Seascape is firmly charting a course for future success.
