Mergers & Acquisitions

ExxonMobil bid for InterOil tops Oil Search offer

ExxonMobil bid for InterOil tops Oil Search offer

InterOil Corporation, an independent oil and gas business with a sole focus on Papua New Guinea, said it has received an offer from ExxonMobil Corp. that tops an earlier offer from Oil Search, another Papua New Guinea company.

InterOil’s assets include a 36.5% interest in the Papua LNG Project, which comprises one of Asia’s largest undeveloped gas fields, Elk-Antelope, in the Gulf Province, and exploration licences covering about 16,000 sq. km.

On May 20, 2016, InterOil agreed to be acquired by Oil Search, the company’s joint venture partner in the Elk/Antelope discovery, which underpins the proposed Papua LNG Project.

Oil Search also entered into an exclusive Memorandum of Understanding (MoU) with Total SA, following Oil Search’s agreement to acquire InterOil. The MoU states that Oil Search will sell down 60% of InterOil’s interests in PRL 15 and 62% of InterOil’s interests in its other exploration assets to Total, following the successful completion of Oil Search’s acquisition of InterOil. The terms of the sell down will be consistent with the value implied under the InterOil transaction.

On June 30, 2016, InterOil announced that it has received another unsolicited offer; in today’s announcement, the InterOil board said that the offer from ExxonMobil was “superior” to the Oil Search bid.

Oil Search has until July 21 to submit a revised offer and said it was talking to Total about making a higher bid.

ExxonMobil’s offer of USD 45 per share values InterOil at USD 2.5 billion, while Oil Search’s bid of USD 40.25 per share values InterOil at USD 2.2 billion.

The bid from ExxonMobil includes a higher initial so-called “contingent-value right,” offering USD 7.07 per share for each trillion cubic feet (tcf) of likely gas reserves above 6.2 tcf found in InterOil’s Elk-Antelope fields, capped at 10 tcf. The Oil Search offer was for an additional USD 6.05 per share for each trillion cubic feet more than 6.2 tcf, with no cap.

In the event that its agreement with InterOil is terminated, Oil Search would be entitled to a USD60 million break fee, of which Total would be entitled to 20%.

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