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).
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Oil Search and InterOil believe the use of existing infrastructure and co-location of plant sites will potentially drive material capex and operating cost savings, plus anticipated schedule acceleration, maximizing returns for all stakeholders, including the PNG government, landowners and co-ventures.
Oil Search will also consider a dual listing in either NY or Toronto as its worldwide shareholder base expands.
“In sharp contrast to Woodside, this deal has substantial synergistic values”, Mr Botten said of the InterOil purchase.
“The transaction will enable InterOil shareholders to continue to benefit from the value created through the commercialisation of gas resources along with exposure to Oil Search’s portfolio of high quality assets”, he says. And a counterbid is unlikely given that Total was the most logical alternative buyer.
“We note that regardless of whether integration of Papua LNG and PNG LNG is achieved, the standalone development of Papua LNG remains extremely robust”. In a standalone project case, aligns Total and Oil Search to deliver a robust LNG project with equity available for buyers and potential new participants.
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. The transaction is anticipated to occur shortly after completion of the proposed acquisition of InterOil. It will boost Oil Search’s stake in the key Elk-Antelope project from 22.8 percent to 29 percent. No further contingent resource payments or exploration carries will be due by Total. This process will follow the yet-to-be formally approved Antelope-7 appraisal well program.
The takeover of InterOil will give it a bigger stake in Total’s project and help it push for quicker development. The share component of the deal is valued at about $40.25 per InterOil share. Yet that simply tracks a decline in global oil prices.
Although Woodside has a long-standing interest in Papua New Guinea’s oil and gas riches, chief executive Peter Coleman said his merger and acquisitions focus remained “in the sub-$1 billion range”.
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The Papua LNG Project, which will be operated by Total, includes one of Asia’s largest undeveloped gas fields, Elk-Antelope. Total is very pleased to establish such a strong cooperation with Oil Search.
