InterOil expands gas resources

WITH final bids due for its LNG project plans yesterday, InterOil revealed the drilling success last year increased its total gas pool in Papua New Guinea by 9.6% to an estimated 10.3 trillion cubic feet of natural gas equivalent.
InterOil expands gas resources InterOil expands gas resources InterOil expands gas resources InterOil expands gas resources InterOil expands gas resources

GLJ Petroleum Consultants' latest 10.3Tcfe figure for the Elk-Antelope and Triceratops fields in Gulf Province comes from contingent resource base case estimates of 9.45Tcf gas and 143.6 million barrels of condensate.

InterOil's Triceratops-2 well was declared a discovery by PNG's Department of Petroleum and Energy (DPE) in June after it flowed 27 million cubic feet of gas per day in a drill stem test.

The other upstream feat was the Antelope-3 well, which first hit gas in early December.

In January, InterOil chief financial officer Collin Visaggio told the well had already flowed 44.8MMcfd with 10.4-14.9 barrels of condensate per million cubic feet in a test.

At a recent conference call, InterOil exploration and production general manager David Holland said about 54% of the nearly 10% boost to overall resources came from the Antelope field, while the other 46% came from the Triceratops-2 well.

Meanwhile, InterOil's commercialisation talks for Elk-Antelope with the government and other parties are impacting plans to spud wells in neighbouring petroleum prospecting licences.

"Given the success of the Triceratops-2 well and the better-than-expected results of the Antelope-3 well, we have had discussions with the DPE on our future focus and priorities," InterOil said.

"We believe that a clear mutual objective is to focus on progressing the LNG project.

"To progress development of our core assets, we have applied for variations to modify the well commitments for PPL 236 and PPL 238."

This will not affect InterOil's planned Elk-3, with the rig already on location.

Final bids for an operating stake in InterOil's Gulf LNG project to commercialise the Elk-Antelope field were due yesterday.

InterOil's board will meet its advisors this month to evaluate the bids received and select partners for the project, which is initially targeting 3.8 million tonnes per annum.

Bids involving at least two supermajors are expected and the PNG government has previously signalled it wants to acquire an additional 27.5% stake of the field from InterOil to own half of it, perhaps for separate commercialisation plans.

There is also the separate matter of a condensate project for this field with partner Mitsui Group investing at least $US11.9 million into it so far.

In response to a question in the conference call, InterOil chief executive officer Phil Mulacek indicated that various options for development remained and "we're going to know a lot more over the next 30 and 60 days".

Outside of the Elk-Antelope intrigue, InterOil aims to apply for a petroleum retention licence for its separate Triceratops-hosting PPL.

Under the joint venture struck last year Colombian oil producer Pacific Rubiales Energy (PRE) can earn a big stake of this licence by funding a multi-well program.

InterOil revealed that a 10% net interest was transferred to PRE in January.

As for business results, InterOil ended 2012 with an unrestricted cash position of $49.9 million.

It posted a December quarter net profit of $18.5 million, a 40% year-on-year gain - largely thanks to a 181% year-on-year improvement in its downstream division net profit of $32.6 million.

The recent quarter result helped push InterOil into the green with a $1.6 million net profit result for 2012.

It was a 91% fall from the $17.7 million net profit in 2011, but InterOil had not drilled two wells in that year.


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