ExxonMobil struck a deal with InterOil Corporation to buy all outstanding shares of the latter energy major at a total cost of $2.5 billion, according to Street Insider.
News of the potential deal first broke earlier this week, when Exxon topped Oil Search’s offer—backed by Total—to pay $2.2 billion for InterOil and its natural gas holdings.
Exxon’s bid beat out the offer from Australian-based Oil Search, which has a stake in Exxon’s PNG LNG as well as the planned second terminal with InterOil, a project dubbed Papua LNG.
The Papua LNG project has more favorable geography than Exxon’s PNG LNG, as the gas fields are located closer to the coast where the export terminal would be constructed.
France-based Total and Oil Search had three days, or until July 21st to respond and present a counter offer. Both of the companies had said they were in “active dialogue” with InterOil in order to prepare more competitive proposals.
"This agreement will enable ExxonMobil to create value for the shareholders of both companies and the people of Papua New Guinea," Rex W. Tillerson, chairman and chief executive of Exxon, said at the closing of the deal.
"InterOil's resources will enhance ExxonMobil's already successful business in Papua New Guinea and bolster the company's strong position in liquefied natural gas."
InterOil's board chairman, Chris Finlayson, said, "Our board of directors thoroughly reviewed the ExxonMobil transaction and concluded that it delivers superior value to InterOil shareholders. They will also benefit from their interest in ExxonMobil's diverse asset base and dividend stream."
InterOil shareholders will receive $45 per share sold of the company, paid in kind with ExxonMobil shares at the share price on the transaction date. The investors will also receive a contingent resource payment of $7.07 per share according to the results of a certification process meant to verify the value of leases under InterOil’s name.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…