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Talisman named NGE’s farm-in partner


Friday, 18 September 2009

TALISMAN Energy has increased its foothold in Papua New Guinea after it was named New Guinea Energy’s farm-in partner for PPL 268 and 269.


New Guinea Energy announced in July it had reached an agreement with a multi-national oil company but did not name the company until the binding farm-in agreements had been finalised.

Under the finalised farm-in agreements, NGE will assign an initial 50% interest and operatorship in PPL 269 to Talisman.

Talisman will then reimburse NGE for 75% of the direct costs it has expended, about $A6.2 million ($US5.2 million), to carry out and fund an agreed seismic program up to a maximum of $US6 million, and commit to drilling, completing and testing a well up to a maximum of $US15 million.

NGE will have the ability to progressively assign up to an additional 20% interest in PPL 269 to Talisman based on the decisions over their funding share in the second and third optional wells, up to a maximum of $US15 million per well.

However, if NGE does not choose to assign any further interest to Talisman and wishes to maintain its 50% interest, Talisman will have the right to proceed with two additional wells by contributing 75% of the agreed costs of the second well, and 65% of the agreed costs of the third well.

Under the agreement for PPL 268, Talisman will assume an interest and operatorship of 15% by reimbursing NGE for 50% of the direct expenditure costs (about $US2.17 million) and funding an agreed seismic program up to a maximum $US5 million.

Talisman will have the option to receive an assignment of an additional 35% interest in PPL 268 by funding 80% of the agreed costs of drilling, completing and testing a well.

The company could also receive an additional 20% interest in PPL 268 by funding 100% of the agreed costs of two further optional wells.

With the farm-in agreements finalised, NGE said the parties have agreed to immediately discuss the start of preparation activities for the seismic programs.

If those seismic programs are started before ministerial approval, Talisman has agreed to provide loan funds to NGE to fund those activities.

The loan will then be offset against Talisman’s obligations to fun the seismic programs when ministerial approval to the proposed assignments is obtained.

Talisman has also agreed to provide at cost, technical services to NGE as and when required for NGE’s other licences under the terms of a technical support agreement.
Meanwhile, NGE also announced it would not farm out PPL 267and was pursuing the drilling of the first exploration well on the Panakawa prospect before December 31, 2009.

The company said a preferred drill site had been selected and activities were being carried out to start the drilling of the well.

Disclaimer: Aspermont, publisher of PetroleumNews.net, holds shares in New Guinea Energy.