Exxon's $2.5 Billion Bid For InterOil Tops Rival's -- WSJ
July 19 2016 - 3:03AM
Dow Jones News
By Lynn Cook, Robb M. Stewart and David Winning
Exxon Mobil Corp. has made a higher bid for InterOil Corp., a
U.S.-listed company with natural-gas assets in Papua New Guinea
that local partner Oil Search Ltd. has been trying to buy.
Exxon's all-stock proposal of $2.5 billion is roughly 10% higher
than Oil Search's $2.2 billion proposal for the company, which was
made in May. Oil Search has until Thursday to meet or beat Exxon's
bid.
The corporate tussle over InterOil pits two business partners
against one another. Exxon and Oil Search, which is based in Port
Moresby, the capital of Papua New Guinea, jointly own the country's
only natural-gas export plant. InterOil controls different gas
reserves and has proposed a second liquefied-natural-gas facility
there, which would compete for customers with the $19 billion
Exxon-Oil Search PNG LNG plant.
Oil Search, with financial backing from French oil company Total
SA, set its sights on InterOil's gas assets so it could find ways
to generate savings. But analysts say that even if Oil Search loses
InterOil to Exxon, the company will benefit: If Exxon buys InterOil
it would likely invest in expanding the existing LNG infrastructure
it co-owned with Oil Search, so that natural gas produced in Papua
New Guinea could funnel through one cost-effective project rather
than a competing plant.
If Exxon succeeds in buying InterOil, it will be the first
company the Irving, Texas-based oil giant has purchased in several
years.
Exxon's last large acquisition was the $31 billion takeover of
XTO Energy Inc. in 2009, which gave the big oil company massive new
oil-and-gas reserves in U.S. shale fields. In 2013, Exxon paid $2.6
billion for Celtic Exploration Ltd., based in Calgary, bulking up
the company's shale holdings in Canada.
For the past few years, Exxon has largely shunned corporate
deals in favor of land acquisitions. Much of the oil-and-gas
acreage that Exxon has purchased is in the Permian Basin of west
Texas, which is considered one of the most prolific American basins
with some of the lowest costs to produce in the U.S.
Papua New Guinea is a relatively new energy frontier. The small
Pacific nation only recently joined the ranks of global energy
exporters, in competition for a cluster of large untapped gas
deposits that could be developed to feed Asia's demand for cleaner
fuels.
If Oil Search walks away from its bid for InterOil this week, it
is entitled to a $60 million breakup fee, 20% of which would go to
French oil major Total SA, which partially backed Oil Search's
offer.
Write to Lynn Cook at lynn.cook@wsj.com, Robb M. Stewart at
robb.stewart@wsj.com and David Winning at david.winning@wsj.com
(END) Dow Jones Newswires
July 19, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Exxon Mobil (NYSE:XOM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Exxon Mobil (NYSE:XOM)
Historical Stock Chart
From Apr 2023 to Apr 2024