Talisman farms into Horizon Papua New Guinea permits

Talisman Energy Inc., Calgary, signed a $60 million deal with Horizon Oil Ltd., Sydney, to farm into Horizon’s gas and condensate interests in the western province of Papua New Guinea.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Sept. 15 -- Talisman Energy Inc., Calgary, signed a $60 million deal with Horizon Oil Ltd., Sydney, to farm into Horizon’s gas and condensate interests in the western province of Papua New Guinea.

Talisman will acquire 50% interest in retention lease PRL 4 that contains the Stanley gas-condensate discovery and a 50% interest in PRL 5 that contains the Elevala and Ketu gas discoveries.

Talisman paid $30 million in cash and an additional $8 million to be drawn down at any time and applied to Horizon’s share of capital expenditure on the permits. The remaining $22 million will be drawn down after Papua New Guinea approves the working interest transfers.

Talisman’s entry comes immediately after Horizon’s recent announcement that it terminated its earlier $55 million deal with P3 Global Energy after P3 failed to make the required payments.

Horizon’s short to medium-term plan for development of its Papua New Guinea assets involves production of 140 MMcfd of gas from two wells, and extraction from that gas of an initial 4,000 b/d of condensate, and potentially 40 tonnes/day of LPG before reinjecting the dry gas until a gas market develops in the region.

Horizon says the Stanley gas resource likely would be used for electric power generation to supply local domestic and industrial customers while the larger Elevala and Ketu gas resource would rely on export by pipeline or as a liquid via a small LNG facility.

The deal also adds to Talisman’s recently acquired assets in western Papua New Guinea via its takeover of British company Rift Oil PLC earlier this year. Rift holds two permits, one of which contains the Puk Puk and Douglas gas discoveries.

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