Criterium Energy Ltd. (TSXV:CEQ), an independent upstream energy development and production company focused on energizing growth for Southeast Asia, has announced preliminary operating results for the three-month period ended June 30, 2026 and provided operational updates on the Southeast Mengoepeh gas development project and the Lemat oil play.
- SE-MGH gas development ongoing with project now approximately 70% complete; first gas on track for Q3 2026
- Gas Allocation Letter received, paving way for Gas Sales and Facility Sharing Agreements ahead of anticipated first gas
- Q2 oil lifting realized US$106/bbl, a premium to Brent and Indonesian Crude Price benchmarks
- Commenced the Lemat pilot program to unlock the formation underlying the TAF reservoir in the Tungkal PSC
“Our financial performance this quarter was driven by continued high realized prices from our oil production and the improved cash flow translated into our strongest cash position in more than 18 months, which will support continued investment in near-term oil and gas development,” said Matthew Klukas, President and CEO of Criterium Energy. “Completion of the SE-MGH pipeline and advancing multiple oil optimization initiatives will allow us to significantly grow production beginning in the third quarter, driving increased cash flow that will strengthen the balance sheet and allow us to fund serial development of our other oil and gas projects in Indonesia in the coming quarters and years.”
Operational and Financial Highlights
- SE-MGH gas development progress: Construction of the six-inch, 24 km pipeline that will connect the SE-MGH field (21 bcf 2P Reserves) to existing processing facilities, enabling production of 5-8 mmcf/d1 into a fixed take or pay contract is progressing. The project is now approximately 70% complete with more than 150,000 safe man hours worked. Remaining activities include trenching and backfilling pipe, commissioning and start-up.
- Gas Allocation Letter received: The Company received a Gas Allocation Letter from SKK MIGAS in June, a critical step required to finalize the binding Gas Sales Agreement (“GSA”). The final GSA and a Facility Sharing Agreement are awaiting regulatory sign-off, which is expected to be received ahead of completion of pipeline construction.
- Robust oil revenue realized: For the second quarter of 2026, Criterium realized an average oil price of US$106/bbl, reflecting a premium to Brent and Indonesian benchmarks. Oil production in Q2 2026 averaged 627 bbl/d2, with selected production offline due to ongoing testing and well intervention programs.
- Higher netbacks: Operating netbacks in the second quarter increased 50% quarter on quarter to US$36/bbl3 due to higher gross revenue and stable operating costs.
- Encouraging initial Lemat testing completed: The Company recently completed swabbing operations in the Lemat interval on the MGH-17ST well and saw increased flow rates as a result. Procurement of equipment to complete well stimulation is ongoing. Criterium intends to unlock the 4.7 mmbbl of 2C Contingent Resource1 through reservoir stimulation techniques, such as propellant stimulation and hydraulic fracturing on existing wells.
- Near-term oil optimization amidst higher oil prices: In addition to the Lemat test, Criterium completed well interventions on three wells in the Mengoepeh oil field. The intent is to leverage the upgraded service rig to target production from previously inaccessible zones. These combined initiatives are intended to increase oil production from the Tungkal PSC in the near-term
SE-MGH Development Progressing to First Gas
SE-MGH development, focused on tying into the existing Teluk Rendah Gas Plant, commenced in March 2026. To date, approximately 70% of the project has been completed. Several crews are operating from multiple staging areas and have worked more than 150,000 safe man-hours to this point. The Company’s full financial commitment of US$1.9 million has been advanced using existing cash balances and operating cash flow. Pipeline construction costs are being funded by PT Olindo, the contractor. Remaining tasks that need to be completed include approval of the GSA and FSA, completion of pipeline construction, and commissioning. PT Olindo continues to guide that commissioning and start-up is planned for Q3 2026.
Higher Gross Revenue Drives Improved Cash Position
For the second quarter of 2026, Criterium realized an average oil price of US$106/bbl, reflecting a premium to Brent and Indonesian benchmarks. Operating costs remained relatively stable at US$36/bbl, which translated into higher netbacks of US$36/bbl3. Incremental cash flow from higher realized netbacks is intended to fund near-term oil optimization activities, existing facility and maintenance upgrades, and N-MGH development. At the end of Q2 the Company had cash of US$1.5 million (C$2.2 million), its highest balance in 18 months.
Financial Update
Criterium had previously agreed with its lenders to suspend amortization payments on its debt until specific production targets are met, with regular amortization set to resume upon first gas from SE-MGH. The Company is working with its auditors and has engaged a tax law firm in Indonesia to support a tax assessment aimed at incorporating a US$12.6 million cost recovery pool that was not accounted for during the transition to a Gross Split PSC in 2022. This unrecovered cost pool is not reflected on the Company’s balance sheet. Criterium is also actively seeking the receipt of more than US$2 million in VAT receivables. The Company previously received approximately US$1 million related to the VAT receivable in Q4 2025.
