PNG Watchdog: Oil Search, InterOil Should Seek Approvals For Merger

Reuters

SYDNEY, May 24 (Reuters) - Papua New Guinea may challenge the $2.2 billion merger between Oil Search Ltd and InterOil Corp if they fail to comply with anti-competition procedures, the country's corporate watchdog said Tuesday.

The commissioner of Papua New Guinea's Independent Consumer and Competition Commission (ICCC), Paulus Ain, said he was concerned the parties were not coming to the ICCC for regulatory approvals. The merger would assemble a liquefied natural gas powerhouse in the country.

Asked by Reuters in an email if the ICCC would take legal action to block the transaction, Ain said this was "an option available," but ICCC was first urging the parties to seek the relevant approvals.

"As good corporate entities, they should consider applying to ICCC for an independent assessment into the proposed acquisition," Ain said.

The warning comes as InterOil's ex-chief executive, and other shareholders representing more than 7 percent of InterOil's shares, criticised the deal, saying it undervalues InterOil and erases $1 billion in revenue it was due to receive from France's Total SA..

Analysts have mostly endorsed the union, with Morgans maintaining its target price for Oil Search at A$8.40 ($6.01) a share. The stock closed at A$6.51 on Tuesday.

A spokesman for Oil Search said the companies would engage in what it hopes will be "constructive discussions" with the ICCC to address the concerns.

InterOil is coveted for its stake in the Elk-Antelope fields, which could hold at least 6.2 trillion cubic feet of natural gas.

Oil Search on Friday proposed offering 8.05 of its shares for each InterOil share plus a contingent value right tied to the size of the eventual reserves in Elk-Antelope.

The share component valued InterOil at $40.25 when it was announced. InterOil has since surged to close at $42.24 on Monday.

Papua New Guinea's high-quality gas and low operating costs have encouraged the development of two LNG projects, PNG LNG project, run by ExxonMobil Corp, and the proposed Papua LNG project, run by Total SA.

Oil Search has agreed to sell more than half of InterOil's stake in Papua LNG to Total.

As a result, Oil Search will end up with 29 percent of the Papua LNG project, complementing its 29 percent stake in PNG LNG. Total's stake in Papua LNG will rise to 48 percent.

Oil Search said it continues to believe the deal is compelling for both Oil Search and InterOil shareholders.

(Reporting by James Regan; Editing by Christian Schmollinger)

Copyright 2016 Thomson Reuters. Click for Restrictions.

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE



Most Popular Articles

From the Career Center
Jobs that may interest you
Contracts Administrator
Expertise: Contracts Administration
Location: Houston
 
Operator Qualification Specialist
Expertise: Environmental, Safety & Training|Operations Management|Regulatory Compliance
Location: Cushing, OK
 
Principal - Oil & Gas
Expertise: Executive
Location: Houston, TX
 
search for more jobs

Brent Crude Oil : $45.89/BBL 3.69%
Light Crude Oil : $44.48/BBL 3.97%
Natural Gas : $2.96/MMBtu 1.00%
Updated in last 24 hours