Oil giant ExxonMobil has made a takeover bid for InterOil, a company with assets in Papua New Guinea, that is ‘superior’ to the one previously made by Oil Search.
InterOil confirmed on Monday that the unsolicited proposal to acquire 100% of the outstanding common shares of InterOil, publicly announced by the company on June 30, 2016, was made by ExxonMobil.
InterOil’s Board of Directors, in consultation with its legal and financial advisors, has determined that the ExxonMobil offer constitutes a “Superior Proposal,” as defined in InterOil’s arrangement agreement with Oil Search and InterOil has provided notice of such determination to Oil Search, the company said on Monday.
To remind, Oil Search tabled a bid to acquire a 100 percent of InterOil in May 2016 for $2.2 billion.
Also, in a separate agreement, Oil Search executed a Memorandum of Understanding with the French oil major Total, under which Oil Search would sell to Total, for cash, 60% of the interest acquired from InterOil in Petroleum Retention Licence (PRL) 15 and 62% of InterOil’s exploration assets.
Under the terms of the ExxonMobil offer, InterOil shareholders would receive:
– A payment of $45.00 per share of InterOil, paid in ExxonMobil shares. The number of ExxonMobil shares paid per share of InterOil would be calculated based on the volume weighted average price of ExxonMobil shares over a measuring period of ten days ending shortly before the closing date.
– A Contingent Resource Payment (CRP), which would be an additional cash payment of approximately $7.07 per share for each tcfe gross resource certification of the ElkAntelope field above 6.2 tcfe, up to a maximum of 10 tcfe. The CRP would be paid on the completion of the interim certification process in accordance with the Share Purchase Agreement with Total, which would include the Antelope-7 appraisal well. The CRP would not be transferrable and would not be listed on any stock exchange.
Under the terms of the Oil Search agreement, Oil Search has a period of three calendar days, which will expire on July 21, 2016, during which it can offer to amend the terms of the Oil Search agreement.
Oil Search is under no obligation to make such an offer and InterOil does not know if Oil Search will seek to amend the Oil Search agreement, InterOil said on Monday. The InterOil Board of Directors continues to recommend the Oil Search transaction to its shareholders, the company further added.
InterOil notes that there can be no assurance that the ExxonMobil offer will lead to the termination of the Oil Search agreement and the execution of an arrangement agreement with ExxonMobil, or that the transaction contemplated by the ExxonMobil offer will be approved by shareholders or consummated.
InterOil has interest in Papua New Guinea’s second LNG project, Papua LNG, with expected first gas in the early 2020s. The project is operated by Total with InterOil, Oil Search, and the Papua New Guinea government as its joint venture partners.
Papua LNG will be supported by the Elk-Antelope gas field, located in the Eastern Papuan Basin.
According to InterOil, the project has easy river access, fewer population and shorter distance to the proposed liquefaction plant in Caution Bay, Port Moresby, compared to the existing ExxonMobil-operated PNG LNG project.