New Guinea Energy Sells Stake in PNG Gas Asset to Santos

New Guinea Energy’s wholly owned subsidiary, Kirkland, has signed an agreement with a subsidiary of Santos regarding the proposed sale of Kirkland’s 50% participating interest in Petroleum Prospecting Licence 269 (PPL269) in Papua New Guinea to Santos for a maximum total consideration of up to $40 million.

NGE has guaranteed Kirkland’s obligations under the Sale Agreement.

The consideration for the sale of the 50% interest in PPL 269 includes:

• payment of $32 million cash on completion; and
• payment of $2 million cash if a Petroleum Retention Licence (PRL) is granted over any area of PPL269; and
• payment of a further $6 million cash if a Petroleum Development Licence (PDL) is granted over any area of PPL269.

As per the agreement, Santos has agreed to fund Kirkland’s participating share of expenditure under certain pre-approved work Programs and budgets.

“This transaction is consistent with NGE’s strategy of monetising its gas assets so the company can focus on oil exploration in Papua New Guinea. The sale of PPL277 in late 2012 has, and this sale of PPL269 will, provide material cash injections whilst allowing NGE to retain an interest in the potential upside of developing these assets. This upside is dependent on the success of experienced oil and gas companies in PNG through bonus payments on the grant of a PRL or PDL in respect of PPL269 and PPL277 and an uncapped royalty over any production from PPL277,” NGE Chief Executive Officer, Grant Worner commented said.

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