Jewel in the crown

KINA Petroleum Ltd’s  PPL (petroleum prospecting licence) 338 permit, which is 100% subject to a farmout deal with Oil Search Ltd, could be the jewel in the crown, according to an update from BBY Company Research.
It said while the expanding wet gas resource within PRL (petroleum resource licence) 21, in which KPL had a 15% stake had been a focus, PPL 338 had the potential to host several multi-trillion cubic feet (tcf) targets which could be attractive for a regional gas aggregation LNG strategy.
“It includes the Nipa prospect (3tcf recoverable) which could be either drilled next year after a second phase of seismic is acquired in late this year,” the update said.
“Additional upside in PPL 338 is possible because a portion of InterOil’s multi-tcf Triceratops gas discovery might straddle the PPL 338/ PPL 337 permit boundary.
“Our evaluation of KPL includes very little value for PPL 338 because it is still in the early stage exploration and appraisal phrase.”
The update said:
n    Successful de-risking of the more-prospective parts of PPL 338 over the coming 12 months could add substantial value to KPL;
n    Within PPL 338, KPL had matured the Nipa prospect (recoverable volume of 3tcf gas), which could be drilled anytime in 2013.
The main risk for the Nipa prospect is hydrocarbon migration;
n    Oil Search can earn an initial 30% interest in PPL 338 by funding a seismic survey and a further 40% and operatorship by part funding the cost of an exploration well capped at US$30 million.
Oil Search’s decision to exercise the option has been deferred until a second phase of additional seismic over the Nipa prospect is acquired this December;
n    Further value from PPL 338 could be unlocked courtesy of InterOil’s Triceratops last gas discovery in adjoining permit PPL 237.
Based on InterOil’s published data, KPL’s interpreted closure of the Greater Triceratops field suggest 10% to 15% of the resource could sit within PPL 338.
This could leave implications for a future unitised farmout deal with Oil Search or other interested parties; and
n    Based on Pacific Rubiale Energy Corp’s deal with InterOil to acquire a 12.9% interest in PPL 237 by paying staged cash payments up to US$116 million, a rough look through value for 10% to 15%, Triceratops could be worth around US$90 million to US$135 million.