Oil Search Buys Stake in PNG Gas Asset

Oil Search has entered into an agreement to acquire a 22.835% gross interest in Petroleum Retention Licence 15 (PRL 15), containing the Elk/Antelope gas discoveries in Papua New Guinea (PNG), through the acquisition of the Pac LNG Group for $900 million.

PRL 15 is located in the eastern margin of the Papuan Basin in PNG.

The present PRL 15 Joint Venture comprises InterOil Corp (75.6114%), Pac LNG (22.8350%) and other interests (1.5536%).

According to Oil Search, the acquisition provides the company with a strategic interest in the largest undeveloped gas resource in PNG with significant exploration upside.

“The resource has the potential to underpin a major new LNG development or LNG expansion, both of which are commercially attractive,” Oil Search said in a statement.

A comprehensive appraisal programme of the Elk/Antelope gas discoveries is planned to commence in 2014, followed by a certification of the resource, Oil Search said.

“The acquisition is in line with Oil Search’s strategy to aggregate gas resources to underpin LNG expansion opportunities in PNG and to develop those resources in the most capital efficient manner. The purchase also diversifies the Company’s portfolio and is highly complementary to Oil Search’s existing PNG assets and operating platform in PNG,” the company added.

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.

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