Andalas Energy and Power PLC (LON:ADL) shares shot up around 75% in Tuesday’s early deals after it announced a new consortium agreement which foresees the development of a wellhead power project in Indonesia.
The AIM-quoted firm has signed the deal with PT PP Energi (PPE), a subsidiary of state-owned Indonesian construction and engineering group PT PP (Persero), for a proposed Jambi-1 which would involve a 30 megawatt gas-fired power facility.
Andalas highlighted that the deal represents a major milestone for the company and it is the first of three possible projects under a recently agreed framework arrangement with PPE. It is anticipated that Jambi-1 will generate more than US$10mln of gross revenue per year for 20 years.
Talks will now advance to finalise gas sales terms for the project as well as grid study evaluation and front-end engineering design (FEED).
Together Anadalas and PPE will review project financing options via existing Indonesian and international banking relationships.
David Whitby, Andalas chief executive, said: “This Agreement is a value trigger event for Andalas. With our internal forecasts indicating project revenue in excess of US$10m per annum, the Jambi-1 project has the potential to transform the business and sets the platform to develop further power projects in tandem with PPE.”