In July 2012, Coastal entered into a Small Field Risk Service Contract ("RSC") with Petroliam Nasional Berhad ("PETRONAS") for the development and production of petroleum from the Kapal, Banang and Meranti cluster of small fields (the "KBM Cluster") offshore Peninsular Malaysia. Coastal is the operator of the KBM Cluster fields and intends to hold a 70% equity interest alongside a 30% interest local partner.
Pursuant to the RSC, Coastal provides the upfront development capital and undertakes the development drilling and production of the KBM Cluster in exchange for a remuneration fee and recovery of costs, while PETRONAS remains the owner of the project.
The KBM Cluster fields are located within 20 kilometers of each other in a water depth of 60 meters. The main oil reservoirs are Miocene aged sandstones ranging in depths from 3,800 feet to 7,800 feet. In addition to the development program, the Company intends to conduct appraisal and step-out drilling to exploit further upside it sees in the properties.