Exxon tipped to move in on InterOil

GORGON LNG partner ExxonMobil isn’t letting the grass grow under its feet, with the company believed to be looking at two major development options that will further cement its role as a major player in global gas markets.
Exxon tipped to move in on InterOil Exxon tipped to move in on InterOil Exxon tipped to move in on InterOil Exxon tipped to move in on InterOil Exxon tipped to move in on InterOil

It has been speculated that it will today launch its takeover bid for InterOil and that it will shortly sign a deal to enter Mozambique's fledgling LNG sector.

The Australian newspaper reported that ExxonMobil is preparing to launch a $3 billion plus spoiler aimed at securing control of the Elk-Antelope gas-condensate field and InterOil's Triceratops and Raptor discoveries.

The move is expected to trump the $US2.2 billion ($A2.9 billion) friendly offer from Australia's Oil Search.

The Australian said that the world's largest oil company's supremacy is by no means certain, because while Oil Search was unlikely to be able to defeat the $386 billion behemoth alone it is backed by French giant Total, which has driven the Papua LNG project and is keen to increase its interests in Elk-Antelope via a side deal already in place with Oil Search.

ExxonMobil's bid will pose a dilemma for Total, which stands to see its control over the Papua LNG project reduced if it does not make a counterbid.

The newspaper quotes unnamed sources that the US oiler will offer a small premium to Oil Search's existing bid of $US40.25 per share in a combination of cash and scrip, possibly backed by a further contingent value right similar to that offered by Total and Oil Search.

The CVR is aimed at placating InterOil shareholders who are concerned the company is being sold before the results of the Antelope-7 well are known.

The well, being drilled on the flanks of the Elk structure, could add several trillion cubic feet of gas.

Oil Search has pledged an additional $6.044 per share for every Tcf above the present assessed field size of 6.2Tcf.

Estimates of the size of the Elk-Antelope complex range from 7Tcf to over 15Tcf, although that number has been bandied about by founder and rebel shareholder Phil Mulacek.

The newspaper suggested that ExxonMobil shares may be more attractive to InterOil's mostly US investors than Oil Search shares, because they are on a more familiar exchange and are far more liquid.

Mulacek speaks for about 7.5% of InterOil, and he has long called for a higher offer.

Also in the mix are believed to be hedge fund Point 72 Asset Management, which holds 5.14% and blue chip funds Capital Research Group Investors and Wells Capital Management, which hold a combined 17%, The Australian reported.

InterOil shares last traded at $47.15 reflecting anticipation of a bid from ExxonMobil. They are up almost 50% since Oil Search announced its bid in May.

ExxonMobil is reportedly keen to secure the Elk-Antelope has to ensure it has sufficient resources to support PNG LNG Train 3.

Oil Search is also a partner in PNG LNG, which is one of the world's lowest cost projects, and one that has consistently out-performed expectations.

If ExxonMobil is to bid, it needs to ensure is in the market with plenty of time for InterOil shareholders to assess it before shareholders meet to consider the Oil Search offer on July 28.

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