InterOil sells western Papua New Guinea fields

InterOil sold its retention leases in the western sector of the country to concentrate on its potentially high yielding Elk-Antelope field in eastern Papua New Guinea.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, June 22 -- InterOil, the Canadian company working in Papua New Guinea, sold its retention leases in the western sector of the country to concentrate on its potentially high yielding Elk-Antelope field in eastern Papua New Guinea.

The company sold 43.13% of retention lease PRL4, which contains the undeveloped Stanley gas and condensate field, and 28.576% of PRL5, which contains the undeveloped Elevara and Ketu gas and condensate fields, to Horizon Oil Ltd. in Sydney.

InterOil retained first right of refusal to buy any condensate produced from both areas, which will be used as feedstock for the company's oil refinery in Port Moresby.

Horizon has increased its interests in both retention leases in recent few years and sees opportunity for commercial gas development as early as 2009, particularly in PRL4 at Stanley where the company will now have 100% interest.

Horizon's interest in PRL5 will become 49.647% if the transaction is approved.

The PRL4 deal is subject to government approval, while PRL5 is subject to pre-emptive rights from operator and major interest holder Santos Ltd of Adelaide.

InterOil said its move will allow it to concentrate on development of its potentially huge gas discoveries at Elk-Antelope in the eastern highlands. The recent Elk-4 well flowed at 14 MMcfd. The company said the structure is potentially 13km long and 5km wide with gross reservoir thickness of 500m.

The Antelope-1 appraisal will be drilled later this year.

The company is a member of the Liquid Niugini Gas group with Merrill Lynch and Clarion Finanz AG and plans a two 2-train LNG plant in Port Moresby capable of producing up to 9 million tonnes of LNG/year from 2012 using the Elk-Antelope gas as feedstock.

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