ExxonMobil and Australian company Oil Search have jointly acquired a Papua New Guinea exploration permit from New Guinea Energy for $15 million.
The deal, which is subject to PNG government approval and specific licence conditions, will see the two companies pay $7.5 million each for the 50% stakes in Petroleum Prospecting Licence 277.
New Guinea Energy will be entitled to an additional $20 million – half each coming from ExxonMobil and Oil Search – if a production development licence is granted over the field.
NGE would also be entitled to royalties over any commercial production that occurs – potentially worth between $48 million and $312 million depending on the size of the deposits and liquefied natural gas prices, as well as a number of other factors.
NGE chief executive Grant Worner said the agreement was a “potential game changer” for the company, giving it high side exposure and a source of ongoing revenue
Located in the PNG Highlands, the licence is one of New Guinea Energy’s six in the Western Province region, and is adjoins several licences in which the acquirers had interests, Oil Search managing director Peter Botten said.
These included the PDL 8 licence, which contains the Angore PNG liquefied natural gas field and PRL 11, containing the Trapia prospect which is due to be drilled following the P’nyang South well.
“We believe the licence is prospective for gas and in an optimal location for future developments," Botten said in an announcement.
The first exploration near the licence would take place during the first half of 2012 as ExxonMobil subsidiary Esso PNG Exploration and Oil Search started drilling the Trapia-1 well.
Located on the border of PPL 277 and PRL 11, the well would target the Trapia structure which NGE said could overlap into PPL 277.