Oil Search informed on Friday it has signed a deal to acquire all of the outstanding shares in InterOil in a transaction valued at approximately US$2.2 billion.
Boards of both companies have approved the transaction that would see InterOil shareholders receive 8.05 Oil Search shares plus a contingent value right for each InterOil share.
The CVR entitles holders to a contingent cash payment that is linked to the volume of 2C hydrocarbon gas resource certified to be contained in the Elk-Antelope fields. Each CVR will deliver approximately $6.05 per InterOil share for each tcfe above 6.2 tcfe gross certified 2C resource in the Elk-Antelope fields, the two PNG-focused companies said in a joint statement.
Oil Search will also provide InterOil shareholders with a cash alternative for the share component, up to a total of $770 million, with any cash not taken up by InterOil shareholders to be applied to an Oil Search share buyback following completion of the transaction.
“The combination is expected to facilitate cooperation and/or integration of the Papua LNG project and the PNG LNG project,” the joint statement reads.
Worth mentioning, this deal comes months after Oil Search rejected an A$11.6 billion ($8 billion) all-share takeover offer by Australian LNG player Woodside.
The InterOil transaction is expected to close in the third quarter of 2016.
Oil Search, Total sign MoU
In a separate statement, Oil Search informed it has signed a memorandum of understanding with Total to sell down 60 percent of the interest acquired from InterOil in PRL 15 and 62 percent of InterOil’s exploration assets to Total.
The two companies have agreed to focus on developing the Papua LNG project and to pursue cooperation and/or integration opportunities with PNG LNG project.
The transaction is anticipated to occur shortly after completion of the proposed acquisition of InterOil. Following completion of the sell-down process, Oil Search and Total will share, on a pro rata basis, all costs and liabilities in respect of acquiring InterOil, as well as any future CVR payable to InterOil shareholders, at or above a 2C resource of 6.5 tcfe for Elk-Antelope, the statement said.
Following the sell-down to Total, Oil Search expects to have an equity interest in PRL 15 of up to 37.4 percent, or 29.0 percent post-government back-in, with Total holding an equity interest in PRL 15 of up to 62.1 percent, or 48.1 percent post-government back-in. PNG government has the back-in rights on 22.5 percent equity interest.
After paying for the additional equity in PRL 15 and equity in InterOil’s exploration assets, Total will also pay Oil Search a further cash amount of $141.6m on 1 July 2017 and $230m at FID for the Papua LNG project.
LNG World News Staff