New Guinea Energy has sold one of its six Western province, Papua New Guinea, exploration licences to ExxonMobil and Oil Search for US$15 million (A$14.2 million).
PPL 227 is located next PRL 11 and PDL 8, which holds the Angore gas field, and is also close to PNG LNG infrastructure.
The sale of PPL 277 reduces New Guinea’s risk and capital obligations associated with working in the country’s highlands and provides it with high side exposure and a source of ongoing revenue in the event of commercial development.
The company is entitled to an additional US$20 million if a petroleum development licence is granted and will receive a royalty over all revenue if commercial production occurs.
This could be worth between US$48 million and US$312 million to New Guinea depending on discovery of petroleum and its size, commercial viability of any development, timing of production, LNG pricing at the time of production and other economic and financing contingencies.
New Guinea has received unsolicited offers for its acreage in the past and the acquisition of PPL 277 is a clear indicator of the value of its portfolio.
ExxonMobil subsidiary Esso PNG Exploration and Oil Search will drill the Trapia-1 well on the border of PPL 277 and PRL 11 during the first half of 2012.
Trapia is a large structure within PRL 11 close to the PNG LNG infrastructure and east of the Hides and Angore fields and may overlap into PPL 277.
New Guinea had recognised this possibility earlier and had rescheduled a seismic programme originally planned for the third and fourth quarters in 2011 to the middle of this year to investigate the eastern Trapia structure.
However, it is not known if the new owners of PPL 277 will proceed with the seismic shoot.
Both ExxonMobil and Oil Search will each hold 50% in PPL 277.