Oil Search backs out of InterOil bid

OIL Search Limited will not submit a revised offer for InterOil’s acquisition, the company says.
This followed notification on Monday from InterOil that it had received a superior proposal from ExxonMobil Corporation and that InterOil board intended to change its recommendation and enter into an arrangement agreement with ExxonMobil.
Oil Search managing director Peter Botten said following a detailed review of ExxonMobil’s proposal, Oil Search board had decided it was not in best interests of shareholders to submit a revised offer for InterOil.
“The bid by ExxonMobil clearly underscores the merits of our offer for InterOil and highlights both the quality of our LNG assets in PNG and the potential value that would be created by cooperation between PNG’s two world class LNG projects,” he said.  
Oil Search proposed value was US$40.252 (K126) per InterOil share, for a total transaction value of approximately US$2.2 billion (K7b).

ExxonMobil offered that InterOil shareholders would receive a payment of US$45.00 (K140) per share.  “Total SA 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,” Botten said.

“We are pleased to have created a catalyst for potential LNG project cooperation in PNG and look forward to continued strong working relationships with Total SA, ExxonMobil and the other PNG LNG stakeholders, as well as with the PNG Government.”
Oil Search and Total SA have mutually agreed that they would terminate their memorandum of understanding if InterOil terminates arrangement agreement with Oil Search so it could enter into a binding agreement with ExxonMobil.

In addition, if InterOil terminates agreement with Oil Search, Oil Search would receive a US$60m (K187m) break fee (of which Total is entitled to 20 per cent), which would more than cover costs associated with the offer. When contacted yesterday for comments, ExxonMobil spokesperson said: “As a matter of practice, we do not comment on commercial discussions.”
Total SA in a statement said the company would remain the largest shareholder in petroleum retention license (PRL)15 with 31.1 per cent interest, alongside partners Oil Search (17.7 per cent) and InterOil (28.3 per cent), post Government back-in right of 22.5 per cent.
Total considered initial offer by Oil Search for InterOil represented a fair value for Interoil’s assets and Total was keen to increase its share in the project for such a value.

Total E&P PNG Ltd corporate affairs director Richard Kassman in an email to The National yesterday said: “Total remains committed to Papua LNG and will continue to ensure we deliver a project that is cost effective for benefit of people of Papua New Guinea and PRL-15 stakeholders.”
Meanwhile, the Independent Consumer and Competition Commission (ICCC) as the country’s competition regulator said it is aware of the recent developments and would make its stance known regarding competition within the industry once it has all information on ExxonMobil’s offer.

The National