InterOil, ExxonMobil amend, restate arrangement agreement

Offshore staff

SINGAPORE and PORT MORESBY, Papua New GuineaInterOil Corp. and Exxon Mobil Corp. have progressed in the takeover bid that seemed in jeopardy after being delayed several times.

The two entered into an amended and restated arrangement agreement, which among other items, extends the outside date of the transaction to March 31, 2017. Both the InterOil board of directors and the independent Transaction Committee assembled days ago to conduct a comprehensive review, unanimously recommended the transaction.

The Committee comprised four seasoned InterOil directors and completed a review process to consider whether it was in the company’s best interests to proceed with the ExxonMobil transaction, and to ensure that the procedural and substantive aspects of the transaction are responsive to commentary from the Yukon court.

The Court of Appeal of Yukon overturned the decision in November after allowing an appeal lodged by InterOil founder and ex-CEO Phil Mulacek, who objected to the multi-billion-dollar takeover bid and claimed that Exxon was not adequately compensating the shareholders.

Based on the estimated timing of the interim order hearing, InterOil said it anticipates the special meeting to vote on the ExxonMobil transaction will be scheduled for mid-February 2017.   

Amended terms

Under the amended agreement’s terms, ExxonMobil has agreed to purchase all issued and outstanding common shares of InterOil for consideration consisting of $45/share payable in ExxonMobil shares and a contingent resource payment (CRP). InterOil said that this is consistent with the consideration provided for under the arrangement agreement entered into by InterOil and ExxonMobil in July.   

In addition, the CRP will provide for an additional cash payment of approximately $7.07 per InterOil share for each trillion cubic feet equivalent (tcfe) gross resource certification of the Elk-Antelope field above 6.2 tcfe, up to a cap of 11 tcfe of certified resource. This is an increase from the July arrangement agreement.

The termination fee that may become payable by the company in certain circumstances has been increased from $67 million to $100 million.

Committee review

The committee retained independent legal counsel, Fasken Martineau DuMoulin LLP, to provide transactional and corporate governance advice and engaged BMO Capital Markets, an independent financial adviser, to provide a detailed fairness opinion on a fixed-fee basis. The and thorough review process to consider whether it is in the best interests of InterOil to proceed with the ExxonMobil transaction, and to ensure that the procedural and substantive aspects of the transaction are responsive to commentary from the Yukon court, relating to approval of the transaction.  

BMO has delivered to the committee and the InterOil board a fairness opinion stating that based upon and subject to the various assumptions, limitations and qualifications set out in such fairness opinion, and as of the date of such opinion, the consideration to be received by the InterOil shareholders pursuant to the amended arrangement is fair, from a financial point of view, to the InterOil shareholders.

The committee also oversaw the engagement of GLJ Petroleum Consultants Ltd. (GLJ), an independent qualified reserves evaluator, to provide an update to its contingent resource estimates for the Elk-Antelope field to include the results of the Antelope-6 appraisal well which was completed in 2016. GLJ’s updated estimates for the gross unrisked contingent resources for the Elk-Antelope field are a low estimate of 6.83 tcfe (1C), a best estimate of 7.80 tcfe (2C) and a high estimate of 8.95 Tcfe (3C).

The GLJ updated estimates do not include results from the Antelope-7 appraisal well which is currently drilling.   

Pathway to completion  


To accommodate this schedule, the InterOil Board has set a new record date of Jan. 10, 2017. Holders of record of InterOil’s common shares, options, and restricted share units at the close of business on Jan.10, 2017 will be entitled to vote at the special meeting.   
In recognition of this new timetable InterOil and ExxonMobil have agreed to extend the outside date for completion of the transaction to March 31, 2017. Either party has the right to further extend the outside date to May 31, 2017 if conditions to closing have been satisfied other than those relating to receipt of a final order from the Yukon court.   

12/19/2016

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