SYDNEY: Papua New Guinea (PNG) explorer Oil Search Ltd yesterday said it had bought rival InterOil Corp in a multibillion-dollar deal, but will sell off some of the assets to French energy giant Total SA to fund part of the takeover.
Oil Search is to pay US$40.25 per share for the US-listed company for a total value of approximately US$2.2 billion, as it looks to boost its interests in a key liquefied natural gas (LNG) project under development in resource-rich Papua New Guinea.
The Papua LNG Project, which is to be operated by Total, includes one of Asia’s largest undeveloped gas fields, Elk-Antelope.
The deal came amid expectations that Asian demand for LNG will ramp up in the coming years, analysts said.
“The combination of the companies will increase Oil Search’s exposure to the world-class Papua LNG Project, which is expected to be the next major LNG development in PNG,” Oil Search said in a statement.
Oil Search, set up in 1929 and with most of its assets in Papua New Guinea, is already a partner with US oil giant ExxonMobil Corp on a separate project in the Pacific nation, the similarly named PNG LNG Project, which made its first shipment in 2014.
Senior analyst John Young from private wealth management firm Ord Minnett told reporters that the deal would encourage cooperation between the two projects.
“This agreement between Total and Oil Search demonstrates Total’s strong commitment to the development of PNG’s gas resources,” Total chairman and chief executive Patrick Pouyanne said in a statement.
InterOil shareholders are expected to vote on the deal in July. It is expected to conclude in the third quarter subject to regulatory approvals.
