IRVING, Texas, SINGAPORE, and PORT MORESBY, Papua New Guinea – ExxonMobil Corp. will acquire InterOil Corp. in an agreed transaction worth more than $2.5 billion.
This deal terminates the Oil Search transaction, which announced in May that it would acquire InterOil. Days ago, InterOil announced that it determined ExxonMobil’s unsolicited proposal for acquisition to be a superior proposal. Under the terms of its agreement with Oil Search, the company had a period of three calendar days to amend its terms, which expired today.
Subject to all approvals and satisfaction of closing conditions, the transaction is expected to close in September.
When concluded, this deal will give Exxon access to InterOil’s resource base, including interests in six licenses in Papua New Guinea covering about four million acres, including PRL 15. The Elk-Antelope field in PRL 15 is the anchor field for the proposed PNG LNG project.
Under the terms of the agreement with ExxonMobil, InterOil shareholders will receive a payment of $45/share of InterOil, paid in ExxonMobil shares, at closing. In addition, they will receive a contingent resource payment (CRP), which will be an additional cash payment of $7.07 per share for each trillion cubic feet equivalent (tcfe) gross resource certification of the Elk-Antelope field above 6.2 tcfe, up to a maximum of 10 tcfe.
The CRP will be paid on the completion of the interim certification process in accordance with the share purchase agreement with Total SA, which will include the Antelope-7 appraisal well, scheduled to be drilled later in 2016. The CRP will not be transferrable and will not be listed on any exchange.
Together the share consideration and the CRP represent a material premium to the closing price of InterOil shares on May 19 -- the day prior to the announcement of the Oil Search transaction -- based on a range of Elk-Antelope resource estimates, Exxon said.
Exxon said that it developed PNG LNG on budget and ahead of schedule and is now exceeding production design capacity, claiming the project to be the first of its kind in the country.
ExxonMobil will work with co-venturers and the government to evaluate processing of gas from the Elk-Antelope field by expanding the PNG LNG project. This would take advantage of synergies offered by expansion of an existing project to realize time and cost reductions that would benefit the PNG Treasury, the government’s holding in Oil Search, other shareholders and landowners.
The transaction has been unanimously approved by the boards of both companies. The InterOil board unanimously recommends that InterOil shareholders approve the ExxonMobil transaction.
ExxonMobil said the transaction will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (Yukon) and will require the approval of at least 66⅔% of the votes cast by InterOil shareholders at a special meeting expected to take place in September 2016.
In addition to InterOil shareholder and court approvals, the ExxonMobil transaction is also subject to other customary conditions.