Oil Search announced the signing of five Sale and Purchase Agreements with wholly owned affiliates of TOTAL S.A., for licences in the onshore and offshore Gulf of Papua region in PNG.
Oil Search and TOTAL will hold equal interests in each of the five licences and will work in partnership to explore and appraise the area. The completion of this transaction will mark the first entry of TOTAL Exploration & Production into PNG.
The terms of the transaction comprise both firm and contingent components. The firm component includes the reimbursement of past licence costs and a partial carry through an initial offshore drilling programme and the acquisition of seismic in the onshore licences. In the event of success, further payments may be made. This contingent component includes success-based cash payments and a partial carry of Oil Search through up to seven exploration and appraisal wells in the offshore licences and up to eight wells in the onshore licences.
While the focus of the transaction is on exploring and developing the prospective offshore Gulf and the eastern forelands area, Oil Search and TOTAL have also agreed to form a strategic partnership to look at other licences in PNG, excluding the Highlands area.
The sale is conditional on approval from the Minister for Petroleum & Energy and certain other conditions.
Commenting on the transaction, Peter Botten, Oil Search’s Managing Director, said: “We are delighted to be forging a new partnership with TOTAL in the Gulf of Papua. This is an exciting transaction for both Oil Search and PNG, with the entry into the country of a well-respected major international oil and gas company with a strong development and operations capability.”
TOTAL and Oil Search have complementary skillsets and cultures. Oil Search will continue as the operator, supplemented by expertise from TOTAL. In the event of exploration and appraisal success that leads to an LNG project, TOTAL would develop and operate the downstream facilities of any development. Through the association, Oil Search would have the opportunity to gain exposure and expand its operating capabilities in the downstream and gas marketing areas of the business.
This transaction with TOTAL reflects the culmination of a lengthy and competitively bid selection process, which included a range of international, LNG-capable, independent oil and gas companies.
A drilling programme in the offshore licences, comprising two firm wells and two options, is expected to commence in the first quarter of 2013.”
Jean-Marie Guillermou, Senior Vice President of TOTAL Exploration & Production, Asia-Pacific said: “This acquisition represents an exciting opportunity for TOTAL to enter the upstream in the resource-rich Papua New Guinea. We are convinced that our partnership with Oil Search, a well-established oil and gas player in this country, is a very positive foundation for our future success in this venture. The farm-in reinforces our exploration portfolio in the foothills and carbonates plays and it is in line with our strategy to strengthen our presence in the Asia Pacific, particularly in the gas and LNG sectors.”
LNG World News Staff, October 09, 2012; Image: Oil Search