Former InterOil CEO Phil Mulacek on Monday issued a comment on the recent ExxonMobil’s US$2.5 billion offer to acquire InterOil, claiming the shareholders will forego billions of dollars of value.
He added that by accepting the ExxonMobil proposal, the InterOil shareholders would also miss on five cash payments Total agreed with InterOil in 2014.
According to Mulacek, the contingent resource payment (CRP) is “vastly inadequate for InterOil shareholders” as well as potentially manipulative and structurally flawed.
“The recent certification of the Elk and Antelope resource, which Oil Search, recently conducted in connection with its purchase of a minority interest in PRL15 in 2014, shows an average estimated 2C resource of only 6.43 tcfe,” Mulacek said.
He added that this is materially below the 10 tcfe estimate Oil Search suggested claiming this supports the view that the CRP as proposed by ExxonMobil would have only a minimal value unless modified.
Mulacek, representing the group called ‘Concerned InterOil Shareholders’ said the group’s main concern is that the ExxonMobil’s CRP proposal is based only on a single resource estimate performed after Antelope-7 and before any gas or LNG is produced, which will not fully reflect the true resource size.
The group calls for ExxonMobil to provide for recertifying the resource after production is underway and for supplemental payments based on the recertification, in each case back-to-back with similar recertifications and payments under the existing Total agreement with InterOil, saying, “this is reasonable and fair to both parties.”
Mulacek urged ExxonMobil to amend the CRP proposal and certification review process “to provide a fair outcome for InterOil shareholders as well as Exxon.”