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Exxon Makes ‘Superior’ Offer for PNG Gas Explorer InterOil

  • InterOil determines Exxon’s offer superior to Oil Search bid
  • Oil Search, Total bid $2.2 billion for Papua New Guinea assets

Exxon Mobil Corp. has made a superior offer for InterOil Corp., outbidding Oil Search Ltd. for the company’s large natural gas reserves in Papua New Guinea and the possibility to export the fuel from the Pacific nation.

Exxon is offering a fixed price of $45 per share of InterOil, the company and Oil Search said in separate releases Monday. As part of Oil Search’s $2.2 billion bid with Total SA in May, it offered 8.05 shares for each of InterOil’s, valuing InterOil’s share at $40.25.

The bid from Exxon also includes a higher so-called contingent-value right. Oil Search offered an additional $6.05 per share for every trillion cubic feet of likely reserves above 6.2 trillion found in InterOil’s Elk-Antelope fields. Exxon is offering $7.07 per share for each trillion cubic feet above 6.2 trillion, though capping the extra payout at 10 trillion cubic feet, InterOil said in its statement. Exxon’s contingent resource offer is equal to 90 cents per thousand cubic feet of gas equivalent, according to Oil Search.

“This was widely expected by the market and looks at first glance to be in line with our estimates that Exxon’s bid would be 10 percent higher than the original Oil Search bid,” said Neil Beveridge, an analyst at Sanford C. Bernstein in Hong Kong. “The key question now is whether we see a counter-bid from Total and Oil Search."

Oil Search said in its statement...