Petroleum Retention Licenses (PRLs) 4 & 5 contain the three gas/condensate discoveries at Stanley, Elevala and Ketu. The permits are located in foreland of the Papuan Basin between the Fly and Strickland Rivers near the town of Kiunga.

Santos, as operator of the acreage, is currently conducting studies to determine the most economic development strategy to produce the condensate contained in the discovery wells, possibly by re-injecting the gas and trucking/barging the condensate to the coast.

Several other monetisation plans are also under consideration, according to Carnarvon.

NGE currently has four Petroleum Production Licences that it was awarded in August 2005. It says the purchase of Carnarvon’s interests in PRLs 4 and 5 will form a strategic fit with the licences already acquired.

Subject to its joint venture partners not exercising their first refusal rights, Carnarvon anticipates that the sale of its PNG interests to NGE will be completed by December 2005.

NGE has made an unconditional offer comprising an initial cash payment of $250,000 and the issue of a non-interest bearing convertible loan note in the amount of $250,000, convertible at Carnarvon’s election into 1,250,000 fully paid ordinary shares in NGE at an issue price of 20 cents per share, on or before NGE’s planned listing on a reputable stock exchange.

In the event that NGE’s planned listing does not occur by 30 June 2006, NGE will, at Carnarvon’s election, redeem the convertible loan note and pay $250,000 cash to Carnarvon.