Santos to pay $40m for stake in PNG prospecting licence
PERTH (miningweekly.com) – A subsidiary of energy giant Santos has signed a deal with ASX-listed New Guinea Energy (NGE) to acquire a 50% interest in a petroleum prospecting licence, in Papua New Guinea, for $40-million.
Under the sales agreement, Santos has agreed to fund NGE subsidiary Kirkland’s participating share of expenditure under certain pre-approved work programmes and budgets.
Kirkland would not be liable to repay any funds advanced by Santos, other than in very limited circumstances.
Santos would further make a $32-million cash payment on the completion of the transaction and a $2-million payment if a petroleum retention licence was granted over the tenement area.
A further $6-million would be paid in cash if a petroleum development licence was granted.
“This transaction is consistent with NGE’s strategy of monetizing its gas assets so the company can focus on oil exploration in Papua New Guinea,” said NGE CEO Grant Worner.
He noted that the sale of the exploration licence would provide a material cash injection to the company, while allowing NGE to retain an interest in the potential upside of developing the asset.
The transaction was subject to government approvals, some of which had to be satisfied within the next six months.
The sale agreement also contained a number of conditions that had to be satisfied within a six- to nine-month period, including Ministerial approval of a variation to the licence, and Santos executing an on-sale agreement under which it would sell a portion of the 50% being acquired from Kirkland.
The prospecting licence covers 8 995 km2 in the Western province and has five drillable prospects, with a further 34 leads identified.
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