Oil Search has released a statement claiming that it will not submit a revised offer to acquire InterOil. This follows the recent news that InterOil has received a superior acquisition bid from ExxonMobil. OilSearch was given a three-day window to decide whether or not to amend the terms of the agreement.
Peter Botten, the Managing Director of Oil Search, said: “Given the decision by ExxonMobil to make an offer for InterOil on the terms it has announced, we do not believe it is in the best interests of our shareholders for Oil Search to submit a revised offer to acquire InterOil.
This decision follows a detailed review of ExxonMobil’s proposal, including an analysis of the Elk-Antelope resource certification, the value and opportunities offered by cooperation between Papua LNG and Papua New Guinea LNG (PNG LNG), and the likelihood of realising this value by having ExxonMobil as a member of the Papua LNG joint venture (JV).
Botten went on to say: “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. 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. Opportunities to add value include possible project acceleration, capital and operating cost savings, resource utilisation optimisation and various operating, financing and marketing synergies. Considerable work remains to be done by all stakeholders to realise these opportunities, but the entry of ExxonMobil into Papua LNG would be a material step forward.
“For Oil Search shareholders, the successful takeover of InterOil by ExxonMobil will deliver a major part of our original objectives in the acquisition of InterOil and our agreement with Total SA, without shareholder dilution and any acquisition risk.
“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, with a focus on progressing a potential expansion of the PNG LNG Project and the development of Papua LNG in the earliest practicable timeframe. The PNG LNG and Papua LNG projects remain two of the most competitive new LNG developments globally.”
Should InterOil cancel its arrangement agreement with Oil Search in order to enter a binding agreement with ExxonMobil, Oil Search and Total SA have mutually agreed that they will terminate their Memorandum of Understanding (MoU), including its exclusivity provisions.
Furthermore, if InterOil proceeds to cancel the arrangement agreement with Oil Search, then Oil Search will receive a break fee of US$60 million. This fee, of which Total is entitled to 20%, will cover the costs related to the offer.
Edited from press release by David Rowlands
Read the article online at: https://www.lngindustry.com/liquefaction/21072016/oil-search-decides-not-to-submit-a-revised-bid-for-interoil-acquisition-2793/