Oil Search will not revise InterOil bid

OIL SEARCH has decided not to revise its bid for Papua New Guinea-focussed company InterOil, after ExxonMobil tabled a higher offer earlier this week.

The InterOil board said on 18 Jul that ExxonMobil’s bid of US$45/share, worth around US$2.5bn, was “superior” to the deal agreed with Oil Search in May, as it offered a higher cash component to shareholders, depending on the size of the reserves found in the Elk-Antelope field. The field will feed the Papua LNG project, which InterOil is developing along with Total, Oil Search and the Papua New Guinea government.

The InterOil board informed Oil Search that it was intending to change its recommendation to its shareholders to back the ExxonMobil bid instead, and enter into an agreement with the company. After reviewing its options, the Oil Search board decided that it was not in the interests of shareholders to change its offer.

Oil Search said that it had mutually agreed with Total to terminate their memorandum of understanding, which would have seen Total receive a 60% interest in InterOil’s petroleum retention licence, PRL 15, on completion of the purchase of InterOil.

Oil search managing direction Peter Botten said that ExxonMobil’s bid highlighted the quality of the LNG assets in Papua New Guinea, and the two projects to develop the Papua LNG and PNG LNG.

“Total and Oil Search have already signalled their desire to cooperate with the PNG LNG Project, to maximise synergy values for all stakeholders. Should ExxonMobil be successful in its proposed bid for InterOil, its entry into Papua LNG would significantly enhance the likelihood of material project cooperation,” he said.

Botten added that the takeover of InterOil by ExxonMobil would accomplish many of Oil Search’s original objectives in cooperation.

ExxonMobil and InterOil have yet to comment on Oil Search’s decision. Total said yesterday, prior to Oil Search’s decision, that it is “committed” to cooperation to develop LNG assets in Papua New Guinea.