Under terms of the deal, Horizon will farm out a 28% interest in PPL 206 to Oil Search Limited (23%) and Gedd (PNG) Limited (5%), in exchange for a 20% interest in Oil Search-operated PPL 227 and a carry of US$300,000 in the next well to be drilled in that permit.

The Santos-operated PPL 206 contains the high potential Bosavi prospect, which is due to spud this week. Horizon estimates the Bosavi prospect has mean potential of 150 million barrels of oil with upside of 1 billion barrels.

The PPL 227 permit contains the Kapul prospect which has been estimated to contain in excess of 100 million barrels of oil. Kapul is due to be drilled later in the year.

Horizon told the market the two prospects qualify as "company makers" and because of their proximity to the Kutubu oil pipeline, a discovery at either project could be developed with a three to five year time frame.