InterOil Corporation has signed a binding agreement with Pacific Rubiales Energy (PRE) to explore and further appraise the Triceratops structure on petroleum prospecting license (PPL) 237 in Gulf province, The National reports.
Under the agreement, PRE can earn a 10% net (12.9% gross) participating interest in PPL237, including the Triceratops structure located within that license.
The transaction contemplates staged initial cash payments totaling US$116 million, an additional carry of a portion of the costs of an agreed exploration work programme, and a final resource payment.
PRE’s gross participating interest is subject to the PNG government’s back-in rights provided for in relevant PNG legislation.
This transaction is not associated with the planned sale of an interest in the Elk and Antelope fields and related LNG equity partnering process targeted for the second quarter of 2012.
In accordance with the agreement, the farm-in is subject to the accomplishment of certain milestones over a one-year period (generally, execution of definitive documents and acceptance of registration of the assignment documents by the PNG government) and other standard industry conditions.
Key commercial terms to acquire a 10% net participating interest in the PPL237 license, including the Triceratops structure, include the following:
· An initial cash payment of US$20 million;
· Additional cash payments aggregating US$70 million for the Triceratops structure US$26 million for the balance of PPL237; and
· A carry, of an additional 25% of the expenditures associated with a 250km 2D seismic programme, the drilling, testing and completion of the Triceratops-2 well appraisal well currently underway and six additional appraisal wells planned on the Triceratops structure, and the drilling, testing and completion of four new appraisal wells planned for other locations within PPL237.
PRE is entitled to be repaid the 25% carry from cash flows from production and from reimbursement by the PNG government in the event it decides in due course to exercise its back-in rights under relevant PNG legislation.
Based on current cost assumptions and assuming the full work programme is completed, the initial cash payments and work program consideration are estimated to represent a combined total value of US$345 million, plus a final resource payment.
“InterOil and its partners are pleased to enter into this mutually-beneficial transaction with Pacific Rubiales, a company with a market capitalisation of US$ 9 billion and a track record of successful exploration and production development demonstrated by current production of over 250,000 barrels of oil per day,” said Phil Mulacek, chief executive officer of InterOil.
“We look forward to continuing our relationship with PRE and to accelerating appraisal and development of the Triceratops gas and condensate field in PNG.”