InterOil Corp. (NYSE: IOC) says that negotiations with ExxonMobil Papua New Guinea Ltd. (EMPNG), a subsidiary of ExxonMobil (NYSE:XOM), relating to the development of Petroleum Retention License 15, were ongoing, notwithstanding the lapse of an exclusivity arrangement.
InterOil will continue to work with EMPNG with the aim of accelerating the monetization of its gas resources on terms that will benefit all stakeholders including Papua New Guinea.
InterOil also reported that it had finalized a $75 million secured loan facility to accelerate its exploration and drilling program. The company and its subsidiaries, InterOil Products Ltd. (a downstream entity) and certain upstream entities, have entered into a one-year $75 million equivalent combined secured loan facility with Westpac Bank PNG Limited (Westpac) and Bank South Pacific Ltd. (BSP) to be drawn in tranches, either in US dollars and/or Papua New Guinea Kina (PGK), subject to standard closing conditions.
Borrowings under the facility will be used for exploration and drilling activities with $37.5 million funding to start immediately, and a further $37.5 million upon the execution of an agreement in relation to the monetization of the Elk and Antelope resource. The principal repayment will be made on the earlier of the following: the first resource payment or 12 months from the first drawdown.
Existing downstream working capital facilities with Westpac and BSP totaling K140.0 million have been underutilized, due to the downstream division’s prudent working capital management initiatives and strong liquidity. As such, all parties have agreed to channel existing downstream approved limits of K45.0 million to this secured loan facility. The downstream working capital facility will be kept.at the remaining K95.0 million.
Both facilities will be shared between Westpac and BSP, secured against downstream assets and undertakings, IOC parent guarantee, and guarantees from certain upstream entities.
InterOil Corp. is developing a vertically integrated energy business whose primary focus is Papua New Guinea. InterOil’s assets consist of petroleum licenses covering about 3.9 million acres, an oil refinery, and retail and commercial distribution facilities, all located in Papua New Guinea. In announcing its 2013 second quarter results on July 13, InterOil said that it would build on its success by seeking additional exploration partners.