Oil Search Takeover Rival InterOil For US$2.2bn

Published at 08:53AM - 20/05/16

Oil Search has announced a S$2.2 billion (£1.5 billion) deal to acquire rival InterOil to strengthen its position in Papua New Guinea (PNG).

The acquisition enables the integration of two major liquefied natural gas (LNG) projects in the country – ExxonMobil’s PNG LNG project and the proposed Papua LNG project, run by Total.

“These transactions have strong strategic logic and are consistent with Oil Search’s objective to create and deliver value for shareholders. They further our strategy of pursuing and developing LNG opportunities in PNG and cement our position as the premier exploration and production company in PNG”, Oil Search Managing Director Peter Botten, said.

Oil Search Takeover Rival InterOil For US$2.2bn

In a separate agreement, Oil Search and Total have signed a Memorandum of Understanding (MoU) under which Oil Search will sell to Total, the interest acquired in Petroleum Retention Licence 15 and 62% of its exploration assets.

Following the completion of the acquisition and the MoU, Oil Search’s interest in the Papua LNG Project is to rise to 20.9% and Total’s stake to 48.1%.

As such, InterOil will also gain access to the PNG LNG project, as well as Oil Search’s existing stake in the Papua LNG project.

 PNG And Papua LNG To Integrate

 InterOil is also desired for its stake in the Elk-Antelope fields, which could hold at least 6.2 trillion cubic feet of gas. With this agreement, Oil Search will be offering a contingent value right tied to the size of Elk-Antelope’s eventual reserves.

“This transaction provides InterOil shareholders with a significant value premium, it allows them to access the potential uncapped resource upside of Elk-Antelope, and it gives them exposure to a combined company with enhanced scale and balance sheet strength that is set to become a true champion of Papua New Guinea”, InterOil Chief Executive Dr. Michael Hession, said.

The deal is expected to close in the third quarter of this year.