Pacific Rubiales Energy Corp., Toronto-based Colombian oil and gas operator, will take a farmout from InterOil Corp. to explore and further appraise the Triceratops structure on PPL 237 onshore Papua New Guinea.
Pacific Rubiales signed a binding agreement under which it would spend as much as $345 million to acquire a 10% net participating interest in PPL 237 and appraise the Triceratops structure.
The farmout consists of separate transactions. First, Pacific Rubiales will acquire a 10% interest in the 290 sq km block with a $36 million down payment and funding 35% of total expenditures associated with the license’s exploration work program. The work program consists of 250 line-km of 2D seismic and drilling, testing, and completion of as many as four wells.
Second, Pacific Rubiales will acquire a 10% net participating interest in the Triceratops structure with an $80 million down payment and funding 35% of total expenditures associated with a work program consisting of 250 line-km 2D seismic, the Triceratops-2 appraisal well that InterOil is drilling, and the drilling, testing, and completion of six more exploration and appraisal wells planned on the structure.
On completion of all the work program expenditures, Pacific Rubiales will make an additional cash resource payment based on independently certified prospect resources of the Triceratops structure out of a 70% portion of its proceeds from production. A portion of the initial upfront down payment and 70% of the funded work program are deducted from the resource payment.
InterOil will remain operator of PPL 237, but Pacific Rubiales expects to have an active technical role in the joint operations of the license. The work program is expected to be completed in 2012-14. Pacific Rubiales expects to fund its share of the work program’s expected capital expenditure by internally generated cash flow.
PPL 237 is in the lowland and foothills region of Papua New Guinea 275 km northwest of Port Moresby. InterOil’s Triceratops-2 appraisal well is meant to test a previously discovered gas field identified by wells drilled in 1959 and 2005.
PPL 237 lies along trend with Antelope and Elk gas-condensate fields containing an independently certified best case gross field contingent resource of 8.6 tcf gas and 129 million bbl of condensate, establishing this trend to be a world class hydrocarbon province. The existing and potential resources are being actively explored for the potential to develop a commercial LNG export scheme and condensate stripping operation.
The transaction is subject to the approval of the Papua New Guinea regulatory authority. Pacific Rubiales has working interests in 43 blocks in Colombia, Peru, and Guatemala.