Oil Search said it has entered into an agreement to acquire the Pac LNG Group Companies, which hold a 22.835% interest in Petroleum Retention Licence 15 (PRL 15), located in the eastern margin of the Papuan Basin in PNG.
The present PRL 15 Joint Venture comprises InterOil Corporation (75.6114%), Pac LNG (22.8350%) and other interests (1.5536%).
Under the agreement, Oil Search will acquire the shares in Pac LNG for a consideration of:
• US$900 million, payable at completion; and
• Contingent payments of US$0.775/mcf for any certified 2C raw gas contingent resource within the Elk/Antelope fields greater than 7 tcf, applied to Oil Search’s gross share before Government back-in.
The acquisition of Pac LNG is unconditional and expected to settle within 2 weeks. Oil Search has separately entered into a binding Heads of Agreement with the Pac LNG shareholders and other parties to undertake exclusive negotiations to acquire up to 100% of their interests in four permits. These interests comprise 13.425% in exploration licences PPL 236 and PPL 238 and 11.0423% in PPL 237 and retention licence PRL 39 (which is expected to be granted soon), subject to the parties agreeing terms and satisfying any required third party approvals. PRL 39 contains the Triceratops gas discovery. The exclusivity period extends for a period of six months. The acquisition price for such licences remains to be negotiated between the parties.
Commenting on the transaction, Peter Botten, Oil Search’s Managing Director said: “We are extremely pleased to announce the acquisition of an interest in PRL 15. The purchase of a material interest in this substantial uncommitted gas resource with significant exploration upside is in line with Oil Search’s strategy to pursue LNG expansion opportunities in PNG, where we can leverage our longstanding business experience in the country.
“Oil Search brings a wealth of local experience to the PRL 15 Joint Venture, operated by InterOil Corporation. This includes PNG logistics, upstream operating expertise, landowner and Government relations and, as a participant in the PNG LNG Project, recent exposure to the development of a major LNG project. These skills can be used to help the operator to determine the optimal way to develop this world class resource. In addition, we have contracted one of our drilling rigs to the Joint Venture for the PRL 15 appraisal programme, which will strengthen the partnership between Oil Search and InterOil.
“While Oil Search remains fully focused on the potential expansion of the PNG LNG Project underpinned by Highlands and Western Province gas, the acquisition of an interest in the Elk/Antelope gas discoveries provides Oil Search with a further material and value creating LNG growth opportunity, with multiple development options. It also provides a potential commercialisation route for other nearby undeveloped gas resources in PNG.
“With extensive interests both in the Highlands and Western Province and now in the Gulf basin, the acquisition reinforces Oil Search’s position as PNG’s pre-eminent independent oil and gas exploration and production company.”
Press Release, February 27, 2014