In the move, to be funded by a $1.22bn share sale to the PNG government, Oil Search will buy Switzerland-based Pacific LNG's 22.84 per cent stake in the fields.

It will target using the gas fields to expand the $US19bn PNG liquefied natural gas plant being built by ExxonMobil (and in which Oil Search and Santos are partners) rather than Total's current plans for a stand-alone project.

The widely tipped buyout of the minority interests in the fields, whose majority owner InterOil has a conditional agreement to sell a stake to Total, comes after Oil Search earlier this week delayed its full-year profit report so it could finalise an acquisition.

The funding deal, in which PNG will pay $8.20 a share for 149.39 million shares in Oil Search, allows the government to maintain a presence in the company after its current 14.6 per cent stake is transferred to Abu Dhabi's International Petroleum Investment Company next month when convertible bonds mature.

Shares last traded on Monday at $8.57.

If the PNG funding deal goes ahead, the government will own just more than 10 per cent of the company.

"The Elk/Antelope resource is seen as the largest undeveloped field in the country and there is significant exploration upside attached," Oil Search's longstanding managing director Peter Botten said.

While not saying it outright, Mr Botten strongly indicated he would do all he could to bring the fields into the PNG LNG project.

He stressed his company's position as an infrastructure owner through PNG LNG and said the PNG government was keen to see the resource developed as quickly and efficiently as possible. Expanding PNG LNG would be quicker and cheaper than building a stand-alone project, the option Total and InterOil had been canvassing.

Exxon had spoken to InterOil about buying into Elk and Antelope but talks fell through, enabling Total to negotiate a still-to-be-finalised deal around plans to build a separate plant.

But the Oil Search acquisition may breach a condition in Total's preliminary deal to take a 61 per cent stake in Elk and Antelope from InterOil. The deal is conditional on Total acquiring the Pacific LNG stake.

"It's going to be an interesting few months ahead but we think we are well placed to influence the outcome," Mr Botten said.

He would not say whether Oil Search and Exxon had engaged in strategic discussions on the acquisition.

The Pacific LNG acquisition is unconditional and should be finalised in two weeks.

Mr Botten said Oil Search's apparent 15 per cent premium over Total's entry price was a mix of Oil Search seeing more gas being in the tenements and placing a higher strategic value on the ground.

That the purchase comes with pre-emptive rights over any other stake sale also helped.

UBS is arranging financing for the PNG government and Oil Search.

As a part of the PNG funding facility, UBS will establish a $700m hedge position in Oil Search through an institutional offer at $8.20 a share. If the PNG deal falls through, a $700m standby equity subscription has been executed.

The complex acquisition and unfolding ownership scenario rendered Oil Search's full-year results to sideshow status.

The company said full-year net profit rose 17 per cent to $US205.7m, which just beat expectations of $US202m.

Oil Search readies for PNG with $900 million outlay

Brian Robins

Oil Search will spend $US900 million acquiring expansion options for the PNG LNG project as the venture moves closer to start-up.

The newspaper Australian has a poor history in getting stories right. Careful .

[quote='jft310' pid='38311' dateline='1393585527']

The newspaper Australian has a poor history in getting stories right. Careful .

Lemme guess...self awareness is not your strong suit.

'jft310' pid='38311' datel Wrote:

The newspaper Australian has a poor history in getting stories right. Careful .

Confucius Say:  In PNG, Gov't get what Gov't want.  Careful.

And aside:

Botten..."That puts Oil Search inside both the major energy joint ventures in PNG, led by ExxonMobil's $19 billion PNG LNG project, where Oil Search owns a 29 percent stake. "And with us sitting where we're at in both joint ventures and having a range of other gas resources we're uniquely situated to drive the future of LNG in PNG," Managing Director Peter Botten told reporters. There is enough gas at Elk and Antelope and other gas fields held by Oil Search to feed three new liquefied natural gas units, which could involve a new standalone LNG plant, supply gas for an expansion of the PNG LNG project, or a combination. "We will be pushing for and the government is focused on pushing for capital efficient, fast-to-market development," Botten said".   He highlighted that was in contrast to LNG developments in Australia, where multibillion dollar LNG plants are being built side-by-side in Queensland, resulting in massive cost overruns as the companies competed for labour and equipment. - See more at: http://www.rigzone.com/news/oil_gas/a/131842/Oil_Search_Positions_for_LNG_Expansion_with_900M_PNG_Buy#sthash.RNxdKsDE.dpuf- See more at: http://www.rigzone.com/news/oil_gas/a/131842/Oil_Search_Positions_for_LNG_Expansion_with_900M_PNG_Buy#sthash.It1P0GlO.dpuf

Hession...A Material Interest in a Partnership that Offers Real Benefits

InterOil's Chief Executive Officer, Dr Michael Hession, said: "Oil Search is a logical partner for us in developing these large gas resources.  The company has decades of experience in PNG and is nearing production from PNG LNG.

"It is exceptionally rewarding to know that someone as experienced as Oil Search shares our view of the worth of this resource. This not only validates the value of this world class asset in Elk-Antelope but acknowledges the upside in this asset and the surrounding acreage.

"This partnership will enable us to tap these energy resources more quickly and cost-effectively – and that translates into real financial benefits for Papua New Guinea and the shareholders of the companies involved.

"We welcome Oil Search into our development of Elk-Antelope with Total and look forward to an even closer cooperation with the people and Government of Papua New Guinea in the years ahead. This project and the partnership have the clear backing of the Government, ensuring we have a strong and stable foundation to deliver on this outstanding long-term project."

Remember when PNG LNG expansion made greatest sense a year ago, when XOM gained exclusivity, O'Neill and Parliamanent lauded the plan? Why, it made best sense.  Still does, as part of a greater development.  Provides us with a fast track CSP stripping gold from PRL15.  All agree there is too much gas for a single PNG LNG train.  Careful.  Connect the dots I posit.