NGE to sell 50% gas stake

NEW Guinea Energy Ltd (NGE) will sell 50% of its interest in petroleum prospecting licence (PPL) 269 for up to US$40 million (K96.8 million) to Santos Ltd.
PPL 269 occupied an area of 8,995sqkm in Western, which spanned both foreland and foldbelt structural terrains.
NGE announced yesterday the company and its wholly-owned subsidiary, Kirkland Ltd (Kirkland) had signed a deal with a subsidiary of Santos, Barracuda Ltd (Santos).
The consideration for sale of 50% interest in PPL 269 includes:
n Payment of US$32 million (K77.48 million) cash on completion;
n Payment of US$2 million (K4.84 million) cash if a Petroleum Retention Licence (PRL) is granted over anyarea of PPL269; and
n Payment of a further US$6 million (K14.52 million)  cash if a petroleum development licence (PDL) is granted over any area of PPL269. (However, if a PDL is granted prior to a PRL, a one-off payment of US$8 million (K19.3 million) cash will be payable instead).
Completion of sale of Kirkland’s 50% interest in PPL269 under sale agreement is conditional on receipt of certain government approvals, some of which must be satisfied within six months of execution date.
The sale deal conditions included variation to PPL 269 submitted last March 11 is approved by the minister and that Santos executes an on-sale agreement under, which it would on-sell a portion of 50% participating interest being acquired from Kirkland (on-sale agreement).
Santos had agreed to fund Kirkland’s participating share of expenditure under certain pre-approved work programmes and budgets.
NGE chief executive Grant Worner said: “this transaction is consistent with NGE’s strategy of monetising its gas assets so the company can focus on oil exploration in PNG.
 “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.”