InterOil Notes Changes to Participation Interests in Elk/Antelope Field
InterOil has announced two transactions concerning participation interests in the Elk/Antelope field. In the first transaction (which remains subject to customary closing conditions), InterOil has agreed to acquire indirect participation interests held by a number of investors under the Amended and Restated Indirect Participation Interest Agreement dated February 2005 (the "IPI Agreement"). The interests being acquired total 4.3364% participation in the Elk/Antelope field and in any future discoveries made as a result of four exploration wells still to be drilled under the IPI Agreement. In exchange for these interests, InterOil will issue common shares in two tranches with a value of approximately $56.5 million, equal to twice the total amount of the capital contributions made under the IPI Agreement to date in respect of the interests being acquired. The first tranche, in exchange for 35% of the transferred interests, involves the issue of a number of common shares derived by dividing the value of $19,767,865 by a volume weighted average price. The remaining 65% will be exchanged for an amount of shares derived by dividing $36,711,750 by a further 10 day volume weighted average price (subject to an agreed floor price) determined prior to the final closing date, which is to occur towards the end of the year.
The second transaction is with Clarion Finanz A.G., a Swiss investment firm with existing ownership interests in InterOil's common stock, indirect participation interests under the IPI Agreement and, through its affiliate Pacific LNG Operations Limited, half of the voting and economic interests in PNG LNG Inc, the joint venture entity formed to develop the LNG processing plant in Papua New Guinea. Clarion has acquired a 2.5% direct working interest in gas and condensate in the Elk/Antelope field in furtherance of the option granted to it and announced by InterOil on May 24, 2007. The direct interest was acquired in exchange for a total of $25 million, together with the transfer to InterOil of 2.5% of Pacific LNG's economic interest in the joint venture LNG Project, and payment of certain historical costs incurred in exploring the Elk/Antelope field.
Upon closing of the two transactions, InterOil's current direct interest in its exploration licenses will increase from 71.825% to 73.6614%, excluding the interests of the Independent State of Papua New Guinea able to be taken up under relevant oil and gas legislation.
"The net result of these transactions is value accretive," stated InterOil CEO, Mr. Phil Mulacek. "InterOil has gone to great lengths to ensure that it retains a significant percentage holding in, and operatorship over, its licenses from which significant future value is expected to be derived. We appreciate the financial support provided by these investors and the important funding role played by them as we develop our exploration portfolio."
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