InterOil Corp. (NYSE:IOC) said Monday it has reached a tentative joint venture with oil and natural gas company Pacific Rubiales Energy (TSE:PRE) valued at $345 million, plus a final payment.
Under the heads of agreement, Pacific Rubiales will pay $20 million in cash upfront to InterOil in return for a net 10 percent participating interest in the PPL237 petroleum prospecting license onshore Papua New Guinea.
InterOil will also get, in stages, another payout of $70 million for the Triceratops structure as well as $26 million for the balance of the PPL237 license.
“InterOil and its partners are pleased to enter into this mutually beneficial transaction with Pacific Rubiales,” said InterOil CEO Phil Mulacek.
“We look forward to continuing our relationship with Pacific Rubiales and to accelerating appraisal and development of the Triceratops gas and condensate field in Papua New Guinea.”
Pacific Rubiales has a market capitalisation of $9 billion and currently produces over 250,000 barrels of oil per day.
The transaction also includes a 25 percent carry provision of the costs of an agreed exploration work programme, as well as a final resource payment.
The final resource payment will be paid out over time, similar to royalty payment structure, and will be determined after the completion of the Triceratops-8 appraisal well.
InterOil and other upstream interest holders will receive 70 percent of all cash flows from Pacific Rubiales’ participating interest in commercial sales proceeds until the entire final resource payment is paid in full.
The transaction is subject to the satisfaction of closing conditions by June 15, 2013, or Pacific Rubiales will be reimbursed out of future upstream production proceeds.
Papua New Guinea-focused InterOil’s assets consist of petroleum licenses covering about 3.9 million acres, as well as an oil refinery and retail and commercial distribution sites.
Shares of InterOil moved up by 2.50 percent to $59.81 apiece in trade on the New York Stock Exchange on Monday.