PPL338 Joint Venture

[Palm]

Here is a little speculation for you. PPL 338 is 35% Oil Search, 35% Total Exploration and Production and 30% Kina Petroleum with Oil Search as Operator. Kina had the license, farmed out 70% to Oil Search and then Oil Search Farmed out half or their 70% to Total. Oil Search is the operator of PPL 338. IOC and Oil Search have an agreement to run a seismic program across the boundary between IOC's PPL 237 and the Oil Search JV PPL 338. If the seismic confirms that the Triceratops structure does extend onto the Oil Search JV PPL 338 they will need to drill a well to prove that they have gas on the PPL 338 License. Dave Holland said they plan to drill at least one well. I expect Oil Search to drill a well on their PPL 338 and I expect at least one of the six PRE well to be drilled at Triceratops will be in the Northwestern Area of IOC's PPL 237 license. See http://www.interoil.com/iocfiles/documen...0Final.pdf Page 18. David said if there is gas on both Licenses the State will require them to make a Unitization Agreement between the owner of the two licenses. Oil Search is the Operator of PPL 338 but their Partner Total is the second largest LNG Operator in the World. (I believe that statement was recently made by Total in a news interview) So, after (or maybe before) making the Unitization Agreement for the Triceratops Field it may be that IOC will have a sell down of their portion of Triceratops Field to a Major Operator. The Government wants a Major to be the Operator of the LNG operation. Total may be a perfect fit to become the Operator of the Triceratops Unit or perhaps all of PPL 237 but they will have to go through another competitive bid process to become the winner.

Agree on how the O&G Act applies to this situation.  Will be interesting to see how long it takes DPE to approve the Tri PRL application.  Once that's done and assuming Tri extends into the OSH/Total 338 license, it could be a very quick turn on another LNG project.  We have yet to find out which blocks IOC/PRE have included in the PRL application.  It could reach down to try and include some of the Duckbill/Raptor area unless they are convinced what they have at Tri/Bwata could source a separate LNG project.

[Getitrt2]

I don't know exactly what area is in the PRL application either, but one factor IOC and PRE would have to have considered is that nine blocks is the maximum you can have in one PRL, according to what I am told. I don't know how big of an area that is, but I would think they would want to have as much gas as possible in it. Can they modify a PRL after approval? Any further thoughts, petrengr1?

[Palm]

The "nine block" limit falls under the definition of a "Location".  The O&G Act states that a location cannot contain more than 9 blocks.  Then under Sec 37 in describing the PRL application process for someone with a PPL, it states:

(1) A licensee whose petroleum prospecting licence is in force in respect of the blocks that constitute a location may, within two years after the date on which the blocks were declared to be a location, or such further period as the Minister allows, make application to the Director for the grant of a petroleum retention licence in respect of such of the blocks as the licensee satisfies the Minister contain a gas field or a part of a gas field or, for the better administration of petroleum activities, should be included in a petroleum retention licence.

(2) A licensee may, during the term of a petroleum prospecting licence, make application to the Director for a petroleum retention licence in respect of any block or blocks within the licence area—

(a) that he satisfies the Minister contains or contain a gas field or part of a gas field, or, for the better administration of petroleum activities, should be included in a petroleum retention licence; and

(b) that do not at the time of making the application constitute a location."

So I believe they would not be limited to the 9 blocks per (2).  It would be interesting to know which blocks make up those included in the "Location" granted to Tri/Bwata.

[petrengr1]

The "nine block" limit falls under the definition of a "Location".  The O&G Act states that a location cannot contain more than 9 blocks.  Then under Sec 37 in describing the PRL application process for someone with a PPL, it states:

(1) A licensee whose petroleum prospecting licence is in force in respect of the blocks that constitute a location may, within two years after the date on which the blocks were declared to be a location, or such further period as the Minister allows, make application to the Director for the grant of a petroleum retention licence in respect of such of the blocks as the licensee satisfies the Minister contain a gas field or a part of a gas field or, for the better administration of petroleum activities, should be included in a petroleum retention licence.

(2) A licensee may, during the term of a petroleum prospecting licence, make application to the Director for a petroleum retention licence in respect of any block or blocks within the licence area—

(a) that he satisfies the Minister contains or contain a gas field or part of a gas field, or, for the better administration of petroleum activities, should be included in a petroleum retention licence; and

(b) that do not at the time of making the application constitute a location."

So I believe they would not be limited to the 9 blocks per (2).  It would be interesting to know which blocks make up those included in the "Location" granted to Tri/Bwata.

The nine blocks in the location would include all of the blocks that touch the block that the discovery was made.  If you draw a square on a piece of paper. You can see that there are eight squares that would touch the square where the discovery was made, making a total of nine.

The maximum number of blocks to be included in a location is nine. The maximum number of blocks for a PRL is only limited by the size of the PPL and what you can prove to the Mininser that contain gas or is needed for your operation. My opinion.

[Getitrt2]

It sounds like, however, that for any additional blocks they wanted to add they would have to provide evidence (seismic as opposed to a well?) those blocks are part of a gas field, probably adjacent to the "location".

PS: Thanks, Pet, posted this before seeing yours.

[petrengr1]

Yes and No. Here is an excerpt from the Oil and Gas Act: "the grant of a petroleum retention licence in respect of such of the blocks as the licensee satisfies the Minister contain a gas field or a part of a gas field or, for the better administration of petroleum activities, should be included in a petroleum retention licence."

For example PRL 15 contains 9 blocks, all of them do not contain gas.

[Palm]

The "nine block" limit falls under the definition of a "Location".  The O&G Act states that a location cannot contain more than 9 blocks.  Then under Sec 37 in describing the PRL application process for someone with a PPL, it states:

(1) A licensee whose petroleum prospecting licence is in force in respect of the blocks that constitute a location may, within two years after the date on which the blocks were declared to be a location, or such further period as the Minister allows, make application to the Director for the grant of a petroleum retention licence in respect of such of the blocks as the licensee satisfies the Minister contain a gas field or a part of a gas field or, for the better administration of petroleum activities, should be included in a petroleum retention licence.

(2) A licensee may, during the term of a petroleum prospecting licence, make application to the Director for a petroleum retention licence in respect of any block or blocks within the licence area—

(a) that he satisfies the Minister contains or contain a gas field or part of a gas field, or, for the better administration of petroleum activities, should be included in a petroleum retention licence; and

(b) that do not at the time of making the application constitute a location."

So I believe they would not be limited to the 9 blocks per (2).  It would be interesting to know which blocks make up those included in the "Location" granted to Tri/Bwata.

The nine blocks in the location would include all of the blocks that touch the block that the discovery was made.  If you draw a square on a piece of paper. You can see that there are eight squares that would touch the square where the discovery was made, making a total of nine.

The maximum number of blocks to be included in a location is nine. The maximum number of blocks for a PRL is only limited by the size of the PPL and what you can prove to the Mininser that contain gas or is needed for your operation. My opinion.

Agree Pet except not sure if/how the "You can see that there are eight squares that would touch the square where the discovery was made, making a total of nine." applies in going from the "location" area to the PRL area.  For instance PRL 15 (as seen on slide 6 here http://www.interoil.com/iocfiles/documents/investorrelations/presentationanddocuments/2010/2010-11-22_IOC_Exploration_Investor_Presentation.pdf) consists of 9 blocks, but it is in a shape like the state of Utah.  In looking at the definition of a "location" I don't think all of the blocks in the location have to actually touch the discovery block based on the language in Sec 34 (4) (b).  This seems to allow the 9 blocks for a location to be in the shape of PRL 15 from what I can see.:

34. Declaration of location.

(1) In this section, "discovery block" means a block in which petroleum has been discovered.

(2) Where petroleum has been discovered in a block within a tenement (not being a block that is or is included in a location) the Minister—

(a) shall, on receipt of a request from the licensee; and

(b) may in any case,

declare by notice in the National Gazette—

© in a case referred to in Paragraph (a)—the discovery block and not more than eight adjoining blocks within the licence area that are nominated by the licensee; or

(d) in any other case—the discovery block and such adjoining blocks as the Minister thinks proper,

to be a location for the purposes of this Act.

(3) At the request of the tenement holder or of his own volition the Minister may, by notice in the National Gazette—

(a) include in a location additional adjoining blocks; or

(b) revoke the declaration of a location in respect of one or more blocks,

but a location may not at any time include more than nine blocks.

(4) For the purposes of this section, a block adjoins a discovery block, if the graticular section that constitutes or includes the first-mentioned block has a side in common with, or touches—

(a) the discovery block; or

(b) any block that has a side in common with, or touches, the discovery block."

[sageo]

PetrEngr 1 -Thanks to you and all for your great discussion on our latest news concerning the seismic agreement. The page 18 you refered to in the IOC presentation is enlightening. Our past maps did not seem to show us so close to the ppl 338 boundary line. The upper left-hand corner may eventually extend further west ward !? That would be very interesting,imho.  OT-if you have any free time...(ha,ha) , could you one day post a map showing Jaguar and Leopard's location in relation to Triceratops and E/A. TIA

[Palm]

Yes and No. Here is an excerpt from the Oil and Gas Act: "the grant of a petroleum retention licence in respect of such of the blocks as the licensee satisfies the Minister contain a gas field or a part of a gas field or, for the better administration of petroleum activities, should be included in a petroleum retention licence." For example PRL 15 contains 34 blocks, all of them do not contain gas.

For clarification I believe the 34 blocks are what make up PPL 237.  Per IOC's website they state:

"Petroleum Prospecting License 237

We have a 100% working interest in PPL 237, subject to potential participation and elections made by holders of indirect participation interests and the State. The license consists of 34 graticular blocks PPL 237 PPL 238 PPL 15 covering an area of 3,238 square kilometers or 715,648 acres. On November 30, 2010, a total of four graticular blocks were excised from PPL 237 and incorporated into PRL 15.

They then state how many blocks are in the other license areas:

"Petroleum Prospecting License 236

We have a 100% working interest in PPL 236, subject to potential participation and elections made by holders of indirect participation interests and the State. The license consists of 53 graticular blocks covering an area of 4,502 square kilometres or 1,112,464 acres

Petroleum Prospecting License 238

We have a 100% working interest in PPL 238, subject to potential participation and elections made by holders of indirect participation interests and the State. The license consists of 94 graticular blocks covering an area of 7,922 square kilometers or 1,978,565 acres. On November 30, 2010, a total of five graticular blocks, including the blocks in which the Elk-1 and Elk-4A gas /condensate discovery wells were drilled, were excised from PPL 238 and incorporated into PRL 15."

I would guess the DPE tries to stick with a "location" being what makes up a PRL, but there seems to also be allowance for some variation.  Not 100% on this however.

[petrengr1]

Yes and No. Here is an excerpt from the Oil and Gas Act: "the grant of a petroleum retention licence in respect of such of the blocks as the licensee satisfies the Minister contain a gas field or a part of a gas field or, for the better administration of petroleum activities, should be included in a petroleum retention licence." For example PRL 15 contains 34 blocks, all of them do not contain gas.

For clarification I believe the 34 blocks are what make up PPL 237.  Per IOC's website they state:

"Petroleum Prospecting License 237

We have a 100% working interest in PPL 237, subject to potential participation and elections made by holders of indirect participation interests and the State. The license consists of 34 graticular blocks PPL 237 PPL 238 PPL 15 covering an area of 3,238 square kilometers or 715,648 acres. On November 30, 2010, a total of four graticular blocks were excised from PPL 237 and incorporated into PRL 15.

They then state how many blocks are in the other license areas:

"Petroleum Prospecting License 236

We have a 100% working interest in PPL 236, subject to potential participation and elections made by holders of indirect participation interests and the State. The license consists of 53 graticular blocks covering an area of 4,502 square kilometres or 1,112,464 acres

Petroleum Prospecting License 238

We have a 100% working interest in PPL 238, subject to potential participation and elections made by holders of indirect participation interests and the State. The license consists of 94 graticular blocks covering an area of 7,922 square kilometers or 1,978,565 acres. On November 30, 2010, a total of five graticular blocks, including the blocks in which the Elk-1 and Elk-4A gas /condensate discovery wells were drilled, were excised from PPL 238 and incorporated into PRL 15."

I would guess the DPE tries to stick with a "location" being what makes up a PRL, but there seems to also be allowance for some variation.  Not 100% on this however.

Yes, it should be 9 blocks in PRL 15. I changed my previous post.

PRL's can be revised if it can be proven that the field has expanded outside the originally approved PRL.