Oil Search Drops InterOil Bid Post Exxon Offer

Oil Search Limited on Thursday said it does not intend to submit a revised offer for InterOil.

The decision comes after InterOil on July 18 informed that ExxonMobil had offered a 'superior proposal'. Without naming ExxonMobil, on June 30, InterOil had announced it received from a third party an unsolicited, conditional and non-binding takeover offer. 

In May, InterOil entered into a binding agreement to be acquired by Oil Search for $2.2 billion, with Oil Search to sell a little 60 percent to Total for $1.2billion. Under the arrangement agreement between Oil Search and InterOil, Oil Search had the opportunity to submit a revised offer before or after any agreement is entered into by Interoil and ExxonMobil.  

“Following a detailed review of the ExxonMobil proposal, including an analysis of the recent Elk-Antelope resource certification, the value and opportunities offered by cooperation between Papua LNG and PNG LNG and the likelihood of realising this value by having ExxonMobil in the Papua LNG Joint Venture, the Oil Search Board has decided it is not in the best interests of shareholders to submit a revised offer for InterOil,” Oil Search said.

Exxon will pay more than $2.5 billion for InterOil. 

“This agreement will enable ExxonMobil to create value for the shareholders of both companies and the people of Papua New Guinea,” said Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil Corporation. “InterOil’s resources will enhance ExxonMobil’s already successful business in Papua New Guinea and bolster the company’s strong position in liquefied natural gas.”

Oil Search has interests in two PNG based LNG projects: ExxonMobil operated PNG LNG project, which is due for expansion, and Total operated Papua LNG project, which is based on development of the Elk-Antelope gas fields in PRL 15. InterOil too has a 36.5 percent stake in Papua LNG project.

“Total SA and Oil Search have already signaled 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,” Oil Search’s Managing Director, Peter Botten, said. “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.”