{"id":6747,"date":"2016-07-18T17:04:23","date_gmt":"2016-07-18T22:04:23","guid":{"rendered":"http:\/\/nrgibroker.com\/?p=6747"},"modified":"2016-08-21T13:51:35","modified_gmt":"2016-08-21T18:51:35","slug":"exxons-2-5-billion-bid-for-pngs-interoil-tops-oil-search","status":"publish","type":"post","link":"https:\/\/nrgibroker.com\/en\/exxons-2-5-billion-bid-for-pngs-interoil-tops-oil-search\/","title":{"rendered":"Exxon\u2019s $2.5 Billion Bid for PNG\u2019s InterOil Tops Oil Search"},"content":{"rendered":"

Exxon Mobil Corp. is doubling down on Papua New Guinea, topping a rival offer for InterOil Corp., a gas explorer focused on the Southeast Asian nation.<\/span><\/h3>\n

The energy giant\u2019s offer values InterOil at $2.5 billion, including debt, beating an earlier bid from Oil Search Ltd.\u00a0and Total SA. Exxon already runs Papua New Guinea\u2019s only liquefied natural gas terminal and buying InterOil, which has gas fields and a stake in a second gas export project in the country, would give it a new source of the fuel for its exports. Oil Search and Total have three days to decide whether to counter Exxon\u2019s offer.<\/span><\/h3>\n

\u201cThis was widely expected by the market and looks at first glance to be in line with our estimates that Exxon\u2019s bid would be 10 percent higher than the original Oil Search bid,\u201d said Neil Beveridge, an analyst at Sanford C. Bernstein in Hong Kong. \u201cThe key question now is whether we see a counter-bid from Total and Oil Search.”<\/span><\/h3>\n

InterOil said Exxon is offering it a fixed price of $45 per share, and values the company at\u00a0$2.5 billion, including $188 billion in net debt. As part of Oil Search\u2019s $2.2 billion bid with Total in May, it offered 8.05 shares for each of InterOil\u2019s, valuing InterOil\u2019s share at $40.25.<\/span><\/h3>\n

The bid from Exxon also includes a higher initial so-called contingent-value right, offering $7.07 per share for each trillion cubic feet of likely gas reserves above 6.2 trillion found in InterOil\u2019s Elk-Antelope fields, capped at 10 trillion cubic feet. Oil Search offered an additional $6.05 per share for each trillion cubic feet more than 6.2 trillion, with no cap.<\/span><\/h3>\n

Oil Search said in a statement it\u2019s talking with Total about its options and that it\u2019s entitled to a $60 million break-up fee, with 20 percent going to Total, if the deal doesn\u2019t go through after InterOil changed its recommendation.<\/span><\/h3>\n

\u201cInterOil has advised that it intends to make a change in its recommendation and enter into an Arrangement Agreement with ExxonMobil,\u201d Oil Search said in a statement.<\/span><\/h3>\n

Exxon is targeting gas fields that hold enough reserves to supply the U.K. for three years. The company already operates the existing $19 billion PNG LNG gas-liquefaction plant in Papua New Guinea. InterOil and its partners have planned the nation\u2019s second export project, Papua LNG. Oil Search is a shareholder in both ventures and has encouraged a tie-up to lower development costs.<\/span><\/h3>\n

Lower Cost<\/span><\/h3>\n

\u201cExxonMobil has submitted an offer to acquire InterOil Corporation, which we believe represents a superior proposal,\u201d Exxon said in a statement.<\/span><\/h3>\n

Oil Search rose as much as 4.2% to A$7.27 in Sydney before trading at A$7.22 at 3:43 p.m. local time.<\/span><\/h3>\n

Papua New Guinea has lower costs than rival LNG sources, making it a more-attractive place to invest in an oversupplied market for the seaborne fuel. A deal for InterOil could speed up a boom in fuel sales from the nation, which began exporting LNG in 2014.<\/span><\/h3>\n

InterOil\u2019s gas fields are closer to the coastal site of its proposed LNG plant and the pipeline that would feed it cuts through a less densely populated region than Exxon\u2019s, which pipes its supply down from the country\u2019s highlands, according to a presentation published on InterOil\u2019s website.<\/span><\/h3>\n

Project Partners<\/span><\/h3>\n

\u201cPNG\u2019s lower costs are largely driven by the downstream. The cost of constructing the LNG facility is lower because labor is cheaper and site preparation is easier,\u201d Matt Howell, a Perth, Australia-based research analyst for energy consultant Wood Mackenzie Ltd., said by e-mail. \u201cIn the case of Elk-Antelope, the fields are also nearer to the LNG facilities and the conditions in that area are a lot kinder, which lowers midstream and upstream costs.\u201d<\/span><\/h3>\n

Oil Search is already a partner in both Exxon\u2019s PNG LNG venture as well as Papua LNG. The Oil Search deal may save the country\u2019s two projects as much as $3 billion and speed up development if they cooperate, according to Managing Director Peter Botten. After buying InterOil, Oil Search planned to sell 60 percent of the assets to Total.<\/span><\/h3>\n

InterOil\u2019s appraisal of the fields found 10.2 trillion cubic feet of likely reserves at the end of 2015. Oil Search released results Friday of a separate analysis of those fields that estimated likely reserves at 6.4 trillion cubic feet. Oil Search said it would do a different analysis if it were to purchase InterOil that would include gas condensate volumes and another appraisal well that could unlock an additional 1 trillion to 2 trillion cubic feet of gas.<\/h3>\n

Exxon has pursued InterOil\u2019s assets in the past. In May 2013, the energy explorer entered into exclusive talks to acquire a stake in InterOil\u2019s Papua New Guinea discoveries, estimated at the time to hold the equivalent of 9 trillion cubic feet of recoverable gas. The talks collapsed later that year for undisclosed reasons.<\/span><\/h3>\n

\"\"<\/a><\/h3>\n

Copyright: Bloomberg<\/a><\/span><\/h3>\n","protected":false},"excerpt":{"rendered":"

Exxon Mobil Corp. is doubling down on Papua New Guinea, topping a rival offer for InterOil Corp., a gas explorer focused on the Southeast Asian nation. The energy giant\u2019s offer values InterOil at $2.5 billion, including debt, beating an earlier bid from Oil Search Ltd.\u00a0and Total SA. Exxon already runs Papua New Guinea\u2019s only liquefied […]<\/p>\n","protected":false},"author":1,"featured_media":6749,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1017],"tags":[735,915,961,960,709],"class_list":["post-6747","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-exxon","tag-investment","tag-oil-search","tag-png","tag-security"],"_links":{"self":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/posts\/6747","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/comments?post=6747"}],"version-history":[{"count":0,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/posts\/6747\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/media\/6749"}],"wp:attachment":[{"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/media?parent=6747"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/categories?post=6747"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nrgibroker.com\/en\/wp-json\/wp\/v2\/tags?post=6747"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}