Sydney (AFP) – Papua New Guinea explorer Oil Search Friday said it had bought rival InterOil in a multi-billion-dollar deal, but will sell off some of the assets to French energy giant Total 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 $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 will be operated by Total, includes one of Asia’s largest undeveloped gas fields, Elk-Antelope.
The deal comes amid expectations that Asian demand for LNG will ramp up in 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 PNG, is already a partner with US oil giant ExxonMobil on a separate project in the Pacific nation.
The massive PNG LNG Project made its first shipment in 2014.
Senior analyst John Young from private wealth management firm Ord Minnett told AFP the deal would encourage cooperation between the two projects, and potentially accelerate development of the second.
Total’s chairman and chief executive Patrick Pouyanne said in a statement: “This agreement between Total and Oil Search demonstrates Total’s strong commitment to the development of PNG’s gas resources.
“We will increase our operated interest to a more material level to drive the future development of the Papua LNG project, a low-cost onshore LNG project close to Asian markets.”
InterOil shareholders are expected to vote on the deal in July. It is expected to conclude in the third-quarter of the year subject to regulatory approvals.
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