Exxon's $2.5 billion bid for PNG's InterOil tops oil search

NEW YORK: Exxon Mobil Corp. is doubling down on Papua New Guinea, topping a rival offer for InterOil Corp., a gas explorer focused on the Southeast Asian nation.

The energy giant's offer values InterOil at $2.5 billion, including debt, beating an earlier bid from Oil Search Ltd. and Total SA. Exxon already runs Papua New Guinea's only liquefied natural gas terminal and buying InterOil, which has gas fields and a stake in a second gas export project in the country, would give it a new source of the fuel for its exports. Oil Search and Total have three days to decide whether to counter Exxon's offer.

"This was widely expected by the market and looks at first glance to be in line with our estimates that Exxon's bid would be 10 percent higher than the original Oil Search bid," said Neil Beveridge, an analyst at Sanford C. Bernstein in Hong Kong. "The key question now is whether we see a counter-bid from Total and Oil Search."

InterOil said Exxon is offering it a fixed price of $45 per share, and values the company at $2.5 billion, including $188 billion in net debt. As part of Oil Search's $2.2 billion bid with Total in May, it offered 8.05 shares for each of InterOil's, valuing InterOil's share at $40.25. The bid from Exxon also includes a higher initial so-called contingent-value right, offering $7.07 per share for each trillion cubic feet of likely gas reserves above 6.2 trillion found in InterOil's Elk-Antelope fields, capped at 10 trillion cubic feet.