KINA Petroleum will surrender petroleum prospecting licence PPL 337 to the Papua New Guinea government after deciding further exploration work could not be warranted.

The licence area was the site of the Raintree 1 and Kwila 1 wells which Kina drilled in 2015 under a partnership with Heritage Oil.

Kina said in December that it would refrain from exploration work over the area until it completed a review of remaining prospectivity.

Since then, the company had concluded there was insufficient remaining prospectivity in the licence to justify further work, particularly given the current oil price.

Kina managing director Richard Schroder said the prospect of a commercial discovery in the licence was low for the foreseeable future.

“Our strategy and areas of focus remain clear, and surrendering the licence allows us to optimise our asset portfolio during a period where low oil prices will continue to necessitate step changes throughout the broader industry,” he said.

The wells were the first drilled in the Madang region for more than 20 years.

New activities carried out by Kina in 2015 include confirming the Malisa South Lead in PPL 437 as a drillable prospect and reprocessing more than 3,300 kilometres of vintage seismic data in PPLs 338, 435 and 436.

“Several attractive features have been identified from the reprocessed seismic data in PPL 437,” the company said.

Nonetheless, the company confirmed in its annual report that it believed a well on PPL 437 could only be justified once the oil price improved and there was a commitment to develop the Elevala/Ketu fields.