ExxonMobil launches bidding war for InterOil in PNG gas push
MELBOURNE (Reuters) - ExxonMobil Corp has made a bid worth at least $2.2 billion for InterOil Corp and its stake in a rich Papua New Guinea gasfield, winning the support of its target and topping an offer from Australia's Oil Search Ltd.
The bid pits ExxonMobil, the world's biggest oil company, against Total SA, which is backing Oil Search, as the French giant looks to push forward with its planned Papua LNG project to rival ExxonMobil's existing PNG LNG project.
Oil Search, which owns a stake in both projects, bid for InterOil in the hopes of tying the two LNG projects together to help cut costs and speed up development of the new gas field. ExxonMobil's move could still achieve similar ends.
PNG is considered one of the best locations for LNG projects because of its high quality gas, low costs and proximity to Asia's big LNG consumers.
If Oil Search wins InterOil, Total has agreed to buy part of InterOil's stake in the Elk-Antelope gas field, which would give it a 48 percent stake in the field that will feed its planned project. Elk-Antelope gas could also be used, at least initially, to feed ExxonMobil's PNG LNG project.
Drilling of one more well this year could prove the field holds much more than the at least 6.2 trillion cubic feed (tcf) of gas under current estimates.
Oil Search has at least until July 21 to submit a revised offer and said it was talking to Total about making a higher bid. Total was not immediately available for comment.
Analysts said Oil Search's dream of getting Total and ExxonMobil to work together could still be fulfilled even if it walks away from the bid for InterOil, handing it to ExxonMobil.
"This is obviously very positive for Interoil shareholders, but it's positive for Oil Search shareholders, too, because through Exxon coming in they get the benefit of the alignment of projects without the (share) dilution in the near term," said Bernstein analyst Neil Beveridge. Continued...