Papua New Guinea: Esso, Oil Search eye PPL 277

Esso PNG Exploration Ltd. and Oil Search Ltd. will each acquire 50% of the working interest in PPL 277 in Papua New Guinea from New Guinea Energy Ltd., Sydney, contingent on receipt of the next extension of the license and other government approvals.

Consideration for the interests, held by New Guinea Energy’s Kingsbury Ltd. subsidiary, is $7.5 million from each purchaser. New Guinea Energy may become entitled to a further $20 million if a petroleum development license is granted and, if commercial production occurs, a royalty on all revenue received from hydrocarbons produced and sold.

The company said it is difficult to assign a value to these additional rights as they depend on a number of factors and contingencies outside its control, such as discovery, size of discoveries, commercial viability of development, timing of production, LNG pricing at the time of production, and other economic and financing contingencies.

The first exploratory activity near PPL 277 will be Esso and Oil Search’s drilling of the Trapia-1 well on

the boundary of PRL 11 and PPL 277 in the first half of 2012. Trapia is a large structure in PRL 11 close to the PNG LNG infrastructure and east of Hides and Angore fields. The structure may extend into PPL 277.