LONDON Stock Exchange-listed Heritage Oil has agreed to acquire interests in two onshore licences in Papua New Guinea from Kina Petroleum as it continues to grow its holding in the country’s hydrocarbon-rich provinces.
The company will farm-in to petroleum exploration blocks PPL 337 and PPL 437 which have a gross area of about 550,800 hectares and 153,000 hectares respectively.
Heritage will earn an initial 70 per cent working interest in PPL 337 and be appointed operator. The company will also earn a 30% working interest in PPL 437 with an option to acquire an additional 20% interest and operatorship.
Under the deal Heritage must fund the costs of drilling two shallow exploration wells and will make a contribution to Kina’s back costs on PPL 337.
In the event of a discovery, Heritage will carry Kina’s costs of up to 100 kilometres of appraisal seismic data.
In return for earning a minority interest in PPL 437, Heritage will carry Kina’s seismic acquisition costs for a minimum of 100 kilometres of data and contribute $300,000 to the company’s back costs on the licence.
PPL 337 is located in the south eastern part of the North New Guinea basin. Three prospects and one lead were identified on the licence.
The licence is accessible by road and is located near potential local gas markets. Additionally, it is close to the deep water port of Madang which Heritage said could be suitable for LNG export.
PPL 437 is located in the hydrocarbon system less than 20 kilometres north of the Elevala and Ketu gas condensate fields and the recent Tingu-1 exploration discovery well.
The licence, in which Kina has an 80% stake, is located close to an existing gas pipeline from PNG LNG gas fields to the LNG plant in Port Moresby.
Heritage chief executive Tony Buckingham said the region would provide a great opportunity for highly commercial exploration in prolific hydrocarbon provinces.
“We believe these farm-ins to be key additions to our existing licence portfolio in Papua New Guinea…and view this region as a core area of exploration portfolio,” he said.
“The work programs across the licences are progressing with a number of high impact wells slated for 2014.”
Kina managing director Richard Schroder said the work program in PPL 337 would see the first major drilling campaign in the basin since the early 1990s and was aimed at unlocking the potential of the Ramu sub-basin.