To say that Exxon Mobil Corp. (NYSE: XOM) won a bidding war with Oil Search for the right to acquire InterOil Corp. (NYSE: IOC) may be something of an overstatement. But whatever it was, Exxon got what it wanted.
In its announcement Thursday morning, Exxon said the transaction is worth more than $2.5 billion. The world’s largest publicly traded oil and gas producer paid $45 a share for InterOil and agreed to pay an additional $7.07 in cash per share for every trillion cubic feet discovered in the Elk-Antelope field, up to a total of 10 trillion cubic feet. The contingent resource payment, as it is called, is not transferable and will not be listed on any exchange. InterOil shares traded both in New York and Australia.
If the full 10 trillion cubic feet are discovered and certified, Exxon will pay InterOil shareholders an additional $26.87 per share. InterOil has nearly 50 million shares outstanding currently, placing a value of around $1.3 billion on its offer. Exxon’s basic offer of $45 per share will be paid in Exxon stock.
OilSearch gets a consolation prize of a $60 million break-up fee.
Spot prices for liquefied natural gas (LNG) in Asian markets fell to around $4.25 per million BTUs earlier this year and currently stand at around $5.75. Prices rose to around $20 in Japan in 2013 and around $18 in South Korea.
InterOil is an LNG producer that holds leases for about 4 million acres in a natural gas field that holds trillions of cubic feet of reserves in Papua New Guinea (PNG). Strategically, the Asian market for LNG, which is the world’s largest, could be best served by supplies coming from PNG rather than the U.S. Gulf Coast because shipping costs would be so much lower.
At least two-thirds of InterOil’s shareholders need to approve the acquisition, and other customary closing conditions and approvals are also required. Exxon expects the deal to close in September.
Exxon’s stockholders are not too keen on the acquisition, pushing the share price down about 0.3% in the mid-afternoon to $93.63 in a 52-week range of $66.55 to $95.55.
100 Million Americans Are Missing This Crucial Retirement Tool
The thought of burdening your family with a financial disaster is most Americans’ nightmare. However, recent studies show that over 100 million Americans still don’t have proper life insurance in the event they pass away.
Life insurance can bring peace of mind – ensuring your loved ones are safeguarded against unforeseen expenses and debts. With premiums often lower than expected and a variety of plans tailored to different life stages and health conditions, securing a policy is more accessible than ever.
A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. Life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.
Click here to learn how to get a quote in just a few minutes.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
