( HOHOHO, WARNING:Shorts will still claim IOC/TOT deal sucks though.........)
27 February 2014 06:09 GMT
Oil Search will take its stake through a purchase of Pac LNG which is a 22.8% stakeholder in the project.
The company will pay $900 million to acquire all shares in Pac LNG which equates to $0.77 per million cubic foot of certified best estimate contingent resource.
The acquisition was unconditional and is expected to settle in two weeks.
Separately, Oil Search has entered into a binding heads of agreement with Pac LNG shareholders and other parties to undertake exclusive negotiations to purchase up to 100% interest in four other permits.
This is made up of a 13.4% interest in PPL 236 and PPL 238 and 11.04% interest in PPL 327 and PRL 39.
The exclusivity period will last for six months with the price to be negotiated in that time.
Oil Search said the purchase gave it access to the “largest undeveloped gas resource in PNG”.
“Oil Search estimates presently that gross Elk/Antelope best estimate contingent resources are 5.3 trillion cubic feet of raw gas including 75 million barrels of associated liquids,” the company said in a statement to the Australia Securities Exchange.
“Up to three appraisal wells, including the proposed Antelope- 4 well, are planned to be drilled on PRL 15 over the next 18 months, to prove up sufficient gas resources to support a new LNG development.”
Based on estimates, a potential LNG development from PRL 15 gas could warrant an expansion of PNG LNG or a standalone facility.
The asset is complementary to Oil Search’s existing interests which it could leverage to expand its presence in PNG.
Oil Search said cash flow from the project could support multiple LNG developments.
The company entered a trading halt on Tuesday pending the announcement.
It was tight-lipped about the material announcement but speculation was mounting it would involve the Elk/Antelope purchase.
Oil Search previously tipped the potetial for a new train or a new gas project before the deal was announced.
Full-year results were delayed pending the announcement, but Oil Search posted its results on Thursday afternoon.
The company posted a year-on-year profit jump of 17%, which the company said was a good result given the lower oil price.
The board has approved an unfranked dividend of $0.2 per share, with a view to change the dividend policy in 2015 as the PNG LNG project comes on stream.
The project, operated by ExxonMobil, is more than 95% complete as crews are starting demobilising and commissioning activities at the Hides Gas conditioning plant and the downstream site.
PNG LNG production is expected to have a “market impact” on 2014 oil and gas production despite the fact it will only be operational for part of the year.
2014 production guidance is expected to double on 2013 levels with the inclusion of PNG LNG production