PNG registered oil and gas company, Kina Petroleum Limited has announced that it has farmed out part of its interest in petroleum prospecting licence (PPL) 337 and 437 to wholly–owned PNG registered subsidiaries of Heritage Oil Plc.
PPL 337 is situated in the Ramu sub basin close to Madang with access by road through the Usino Bundi. PPL 437 is located within the Papuan Basin in northern foreland of Western Province.
Heritage, a UK-listed- independent exploration and production company, has extensive experience operating throughout Africa, the Mediterranean, the Middle East, Russia and Pakistan.
They have recently identified PNG as a country whose economy generally, and Oil and Gas industry in particular, is experiencing unprecedented levels of economic activity and which has outstanding growth prospects.
Heritage has already completed one farm-in agreement in PNG, operating two licences, and is focused on increasing their footprint and activity levels significantly.
The farm-out agreements executed with Kina, which are subject to government approval, provide for Heritage to earn equity in the licences by carrying KPL through certain work program items. The key terms in respect of each licence are PPL 337 KPL currently holds 100% of the licence. Heritage will:
* MAKE an upfront cash payment of US$500,000 to KPL; and
* EARN a 70% interest in, and operatorship of, the licence by drilling two wells at the already identified Raintree and Kwila locations.
Heritage will operate the drilling program on behalf of the venture.
Kina Petroleum’s managing director, Richard Schroder, commented:
“We are pleased to welcome Heritage as a partner into both PPL 337 and 437 to explore the potential we see in the licences.
“In addition to fulfilment of each licence’s work program commitments through to 2015, the program of work in PPL 337 will see the first major drilling program in the basin since the early 1990s and is aimed at unlocking the gas potential of the Ramu sub-basin for the energy requirements of mines located very close to the proposed prospects as well as meeting existing and future power needs for the greater Madang area.
“The prospects cover a large area and positive exploration results could lead to further exploration with a view to tapping larger markets. The gas sampled at seeps within the licence is 98% methane which is ideal for LNG, and as a deepwater port Madang is ideally located on the northern coast of PNG in the event that a multi TCF resource is observed.