OIL Search’s $3 billion joint bid for InterOil with French oil major Total looks set for success, despite expected opposition from the target’s founder and significant shareholder Phil Mulacek.
As Oil Search’s deal-savvy managing director Peter Botten prepared to head to Papua New Guinea to try to smooth the path with stakeholders, prime minister Peter O’Neill publicly supported the deal and analysts said there was little chance of a better bid or Mr Mulacek getting enough support to vote the deal down.
Meanwhile, shares in the Canada-incorporated, Singapore-based, New York-listed InterOil surged past the minimum deal price on Friday in the US, indicating that investors see value in contingent value rights linked to more gas being proved up at Papua LNG.
The complex joint bid involves Oil Search paying $3 billion in shares for InterOil and then selling down InterOil’s interest in the Papua LNG project to Total for about $2 billion.
Mr O’Neill said the deals should provide cost savings through co-operation of the Papua LNG project and ExxonMobil’s PNG LNG plant.
“This acquisition will provide cost savings and efficiencies for our nation’s greatest growth opportunities, which will directly benefit the people of Papua New Guinea,” Mr O’Neill said.
“These arrangements present a pathway to collaboration and possible integration of the projects, in which both Oil Search and the PNG government would hold influential stakes.”