InterOil Corporation has executed a Farm-In Agreement and related documents with Pacific Rubiales Energy Corp. relating to its acquisition of a 10.0 percent net (12.9 percent gross) participating interest in Petroleum Prospecting License 237 ("PPL 237") onshore Papua New Guinea, including the Triceratops structure and exploration acreage located within that license. This announcement is made further to the Company's announcement on April 30, 2012 that it had entered into a Heads of Agreement ("HOA") with PRE and the terms are materially the same as those previously announced.
Execution of the Farm-In Agreement accomplishes one of the milestones contemplated to complete the farm-in transaction. Completion of the farm-in transaction remains subject to satisfaction of additional conditions within 18 months, including execution of joint venture operating agreements with PRE, and PNG Government approval. Additionally, PRE has the option to terminate the Farm-In Agreement at various stages of the work program and to be reimbursed up to US$96 million of the $116 million initial cash payment, which does not include carried costs, out of future upstream production proceeds.
Pacific LNG Operations Ltd., an affiliate of Clarion Finanz A.G., and its affiliates ("PacLNG") are participating on a 25 percent beneficial equity basis in the portion of the farm-in transaction relating to the Triceratops structure, by reducing PacLNG's indirect participating interest in the Triceratops structure. As a result, PacLNG will receive 25 percent of the payments PRE makes under the farm-in transaction relating to the Triceratops structure. PacLNG will also receive a commission fee of 2.5 percent of cash payments made by Pacific Rubiales other than carry. Certain other indirect participating interest holders may also participate in the farm-in transaction.
"InterOil and its partners are pleased to have completed execution of the Farm-In Agreement with Pacific Rubiales, a company with a track record of successful exploration and production development," stated Mr. Phil Mulacek, Chief Executive Officer of InterOil. "We look forward to completing the Pacific Rubiales farm-in, and to accelerating appraisal and development of the Triceratops gas and condensate field in Papua New Guinea."
Ronald Pantin, Chief Executive Officer of Pacific Rubiales, commented: "We are very pleased to be partnered with InterOil and its management on what we believe to be a world class gas and condensate trend and which provides us with the strategic opportunity for early stage large resource capture on the doorstep of the world's fastest growing primary energy markets."
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