InterOil Reveals 3b Barrel Resource Treasure in Eastern Papua Basin
The resource, the equivalent of 3 billion barrels of oil, is thought to be contained in five exploration and appraisal targets outside the Elk-Antelope field where InterOil is already working with French oil major Total SA and Oil Search.
In InterOil full-year results statement released late Tuesday, chief executive Michael Hession pointed to five successive discoveries in the Eastern Papuan Basin, including Bobcat, Raptor and Triceratops where appraisal wells are being drilled to try to firm up an esimated 8 tcf of resource. In addition, exploration wells are planned at Antelope South and Wahoo, which could hold a further 9 tcf of gas.
"This hydrocarbon inventory suggests a scale which could appeal to any global super-major," said Bernstein Research analyst Neil Beveridge. "Reservoir quality rather than resource presence remains the key risk in our view."
InterOil, which has overhauled its management and board in recent years and is thought to be considering a share listing in Australia, has long been seen as a potential takeover target, with PNG LNG player ExxonMobil touted as a possible acquirer, as well as Australia's Woodside Petroleum. It has 35 other exploration leads in its acreage that are yet to be firmed up.
At Elk-Antelope, InterOil reiterated its target of deciding how to develop the gas resource by the end of June. It said the LNG project proposed for the resource was "potentially the lowest cost new-build LNG project in the world", offering positive prospects for development even after the slump in crude oil prices last year, which has dragged down LNG prices.
"Independent analysis suggests Elk-Antelope is the most competitive new-build LNG project globally, with the potential for superior returns even at low commodity prices," Dr Hession said.
"We are well placed with liquidity of $US715 million and an anticipated certification payment, to meet our commitments and pursue the LNG project timetable.
Yet to be determined is whether Elk-Antelope would be developed as a separate LNG project, or somehow combined with ExxonMobil's $US19 billion PNG LNG venture, which started production last year. The Elk-Antelope venture, led by Total, is aiming to reach a final investment decision on Elk-Antelope in 2017.
Total has had a large team working on the Elk-Antelope LNG development concept since last year and has narrowed down an initial 24 LNG scenarios to three main concepts.
But Bernstein's Mr Beveridge said he saw a final investment decision on Elk-Antelope was more realistic for 2018 rather than any earlier given initial engineering and design is likely to take two years, while the venture also needs to arrange financing and negotiated LNG sales agreements.
InterOil reported full-year profit of $US290 million thanks to a gain on the sale of its refining and marketing business in PNG to Puma Energy and the sale of part of its stake in Elk-Antelope to Total. It is due to receive further funds from Total depending on how much gas is found to be held in Elk-Antelope, and as the project progresses toward development. [SMH]