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May 19, 2021

Oil Search bows to ExxonMobil in battle for InterOil

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Image: A sign is seen in front of the Exxonmobil Baton Rouge Refinery in Baton Rouge, Louisiana, November 6, 2015. REUTERS/Lee Celano

MELBOURNE (Reuters) – Australia’s Oil Search Ltd on Thursday cleared the way for ExxonMobil Corp to take over InterOil Corp for $2.2 billion, opting not to raise its rival offer for its partner in a rich Papua New Guinea gas field.

ExxonMobil this week trumped an offer for InterOil from Oil Search, which was backed by Total SA, in a move that could lead to the U.S. and French giants tying together their competing gas export projects in the South Pacific nation.

Oil Search said it made sense to let ExxonMobil take over InterOil, which owns a 36.5 percent stake in the Elk-Antelope gas field, as the U.S. giant would help speed up development of the field, by using the gas to expand its existing PNG LNG (liquefied natural gas) plant rather than having Total build a new Papua LNG plant.

“For Oil Search shareholders, the successful takeover of InterOil by ExxonMobil will deliver a major part of our original objectives in the acquisition of InterOil and our agreement with Total SA, without shareholder dilution and any acquisition risk,” Oil Search Managing Director Peter Botten said in a statement, as expected.

The oil giants are targeting Papua New Guinea for growth as the quality of its gas, low costs and proximity to Asia’s big liquefied natural gas (LNG) consumers make it one of the few places where expansions are affordable at a time when oil and LNG prices have collapsed.

(Reporting by Sonali Paul; Editing by Richard Pullin)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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