Herbert Smith Freehills advised InterOil Corporation, a petroleum company incorporated in Canada with operations in Papua New Guinea, on its sale of a significant interest in Petroleum Retention Licence 15 (PRL15) to Total of France, one of the world's largest oil and gas companies.

PRL15 contains the Elk and Antelope fields in the Gulf Province of Papua New Guinea. The two fields are the largest undeveloped conventional gas resource in Asia Pacific.

Herbert Smith Freehills advised InterOil on the sale documentation and associated project agreements. In addition to the PRL15 sale, InterOil’s subsidiaries also entered into an option with Total Oil in relation to farming into its adjacent petroleum prospecting licences.

InterOil will receive an upfront cash payment. The sale terms include a carry for an extensive appraisal program (2014 - 2015) and a new deep exploration well in 2015, and for further payments upon achieving project milestones and by reference to certifications of reserves after appraisal and after production.

Perth-based corporate energy and resources partner Stuart Barrymore led the Herbert Smith Freehills team on the deal. He was supported by senior associate Jon Ornolfsson in Singapore and Perth-based solicitor Grace Caterina.

Stuart commented: “After a number of attempts to monetise the Elk - Antelope discoveries, InterOil established a competitive bid process against an extremely tight timeframe moving from preliminary term sheets to a fully termed upstream agreements and an agreed downstream development structure in a little over a month.  InterOil achieved its key objectives of securing a world class partner to operate the project and to lead the gas marketing, ensuring a path to market for gas discovered from its prospective acreage, preserving an interest in the upside potential of its prospects and achieving alignment through the gas commercialisation chain, with participation by InterOil in key decision making. Our Australian - Asia footprint allowed us to effectively deploy the skilled resources when and where required and assist InterOil in the successful execution of its strategy.”