The sales of Austral's 28.92% interest in PRL4 and 10.7% interest in PRL5 - both located near Kiunga in PNG's west - are subject to pre-emptive rights that offer existing joint venture parties 45 days to purchase Austral's stake on the same terms and conditions as the Horizon agreement.

Wellington-based Austral expects the sales to reduce its $US18.65 million company debt by $US3.5 million.

Austral retains its stake in the PPL 235 permit in the onshore Papuan Basin, which contains the Douglas gas discovery and the Puk Puk prospect.

Chief executive Thom Jewell said it was a good time to strengthen the balance sheet and focus on core New Zealand assets including the Cheal field development, Kahili gas development and Cardiff appraisal.

"Austral has completed a review of its inventory of projects and will monetize non-core assets where the divestment can take advantage of the value cycle of the asset and deliver economic value to the company," he said.

Jewell also said Austral has funding and plans in place to drill additional wells in the Cheal field in the second quarter of this year.