HOUSTON, TX, May 23, 2016 /PRNewswire/ - The founding
shareholder, former chairman and Chief Executive Officer of
InterOil Corporation ("InterOil" or the "Company") (NYSE: IOC),
Phil Mulacek, and Petroleum
Independent & Exploration, LLC (together, the "Concerned
InterOil Shareholders"), today expressed their disappointment that
the InterOil board of directors (the "Board") had once again
demonstrated their lack of alignment with the interests of InterOil
shareholders by unanimously approving a proposed bid by Oil Search
Limited (ASX:OSH) ("OSH"), supported by a back-in from TOTAL,
S.A. ("TOTAL"), for all of the outstanding shares of
InterOil.
Commenting on the proposal, Mr. Mulacek said, "After discussions
with institutions and other shareholders, we believe the OSH/TOTAL
bid significantly undervalues InterOil, and incredibly, wipes out
about US$1 billion in future
shareholder value from what InterOil was already entitled to
receive under the existing PRL15 Sale and Purchase Agreement
between TOTAL and InterOil (the "TOTAL PRL 15 SPA"), based on our
reasonable 2C estimates of total field size of the world-class Elk
and Antelope fields within PRL 15. The shortfall arises
because the new proposal omits the payment TOTAL had already agreed
to make after LNG production began, which is a key part of any oil
and gas asset sale agreement. To help resolve this, we
propose to maintain the original structure of the TOTAL resource
payment by delaying the 'CVR' payment until after 2 years of stable
LNG production instead of prior to production, so that the resource
is fully defined and OSH and TOTAL have the benefit of receiving
project cash flows for some time before payment is made. This
preserves what we believe to be significant upside for InterOil
shareholders and is nothing more than what was agreed in the
original TOTAL PRL 15 SPA."
Mr. Mulacek continued, "We are also enormously disappointed, but
unfortunately, again not surprised, that the InterOil Board
announced the bid just before the annual and special meeting to be
held on June 14, 2016, where
important corporate governance issues will be decided by the
InterOil shareholders, including proposals intended to improve
disclosure about the Company's operations and assets to improve
transparency and understanding of the value of InterOil's
hydrocarbon resources. We believe the Board's action further
supports our case that shareholders should sign the BLUE proxy
circulated by the Concerned InterOil Shareholders to push for
changes in Board membership and the way it operates, to better
align with shareholder interests. The Board has sent a clear
message that they do not understand how to surface shareholder
value."
The Concerned InterOil Shareholders believe that by restoring
and maintaining the original payment structure of the TOTAL PRL 15
SPA, InterOil shareholders could retain the benefits of mid- and
long-term growth in shareholder value from development of the Elk
and Antelope fields within PRL-15 and the proposed Papua LNG
project. The shortfall in shareholder value under the
OSH/TOTAL bid arises from the fact that the only resource payment
InterOil shareholders would receive is the CVR payment based solely
on pre-production estimates of field size. Under the TOTAL
PRL 15 SPA, however, TOTAL was required to make both an "Interim
Resource Payment" prior to production and a supplemental "Final
Resource Payment" after production had been underway for some time
based on a "material balance" recertification of the resource size
in PRL-15. According to Mr. Mulacek, a material balance
recertification is typically more accurate than a pre-production
estimate because of the additional available data from production,
and can add significantly to estimated resource size.
"The InterOil Board and management allowed the material balance
payment from TOTAL to be removed, which represents a significant
loss of value assuming an interim certification of 7 tcf and a
material balance certification of 12.5 tcf, both of which we
believe to be reasonable based on our detailed understanding of the
resource. It is appalling to simply give away a billion
dollars when TOTAL had already agreed to pay that amount. We
cannot understand why the Board would believe this to be in the
best interests of InterOil's shareholders." Mr. Mulacek noted
that based on an assumed material balance of 15 tcf, which is
at the top range of some current estimates, the loss for InterOil
shareholders is almost US$2
billion.
Mr. Mulacek also recommends that shareholders sign and return
the BLUE proxy to support the Concerned InterOil
Shareholders. "By submitting this bid, the current Board and
management have effectively resigned and so no longer represent
InterOil's shareholders," he said. "Shareholders were told by
the InterOil Board and management that all future transactions
would be at or above the same pricing as the TOTAL PRL 15 SPA, but
that is clearly not true for the current proposal," Mr. Mulacek
continued. "The nominees of the Concerned InterOil
Shareholders are fully aligned with all shareholders, and would not
sacrifice future shareholder value just to make a bad deal at the
bottom of the market."
InterOil shareholders are urged to discard any materials
received from management, and vote only on the BLUE Concerned
InterOil Shareholders proxy or voting instruction form.
Shareholders are encouraged to vote only the BLUE Concerned
InterOil Shareholders proxy:
- FOR the Proposed Resolutions;
- FOR each of our five of our highly-qualified
nominees;
- FOR the appointment of auditors;
- AGAINST the New Plan Resolution; and
- AGAINST the Mulacek Expenses Denial
Resolution.
If you require any assistance voting your BLUE proxy, contact
the Concerned InterOil Shareholders' proxy solicitor, Evolution
Proxy Inc., at 1-844-226-3222 toll-free in North America, or at 416-855-0238 outside of
North America (collect calls
accepted), or by e-mail at
info@evolutionproxy.com.
Cautionary Statement Regarding Forward‐Looking
Statements:
This press release contains forward‐looking statements. All
statements contained in this filing that are not clearly historical
in nature or that necessarily depend on future events are
forward‐looking, and the words "anticipate," "believe," "expect,"
"estimate," "plan," and similar expressions are generally intended
to identify forward‐looking statements. These statements are based
on current expectations of the Concerned InterOil Shareholders and
currently available information. They are not guarantees of
future performance, involve certain risks and uncertainties that
are difficult to predict, and are based upon assumptions as to
future events that may not prove to be accurate. The Concerned
InterOil Shareholders do not assume any obligation to update any
forward‐looking statements contained in this press release.
Information Contact:
For additional information on this press release please contact
the Concerned InterOil Shareholders at +1 (832) 510-7028, or by
email at info@concernedinteroilshareholders.com
Shareholder Contact:
For assistance in voting your proxy, please contact Evolution
Proxy Inc., at 1-844-226-3222 toll-free in North America, or at 416-855-0238 outside of
North America (collect calls
accepted), or by e-mail at info@evolutionproxy.com
Media Contact:
Bayfield Strategy, Inc.
Riyaz Lalani
+1 (416) 907-9365
rlalani@bayfieldstrategy.com
SOURCE Petroleum Independent & Exploration, LLC