Shareholder snag lingers over Exxon InterOil deal

4:25 pm on 23 December 2016

ExxonMobil's bid to buy the Papua New Guinea-concerned energy company InterOil has hit a new snag.

LNG Project facility, Hela Province, Papua New Guinea

LNG Project facility, Hela Province, Papua New Guinea Photo: RNZI / Johnny Blades

This week it emerged that Exxon had tabled an improved deal following negotiations after InterOil's founder Phil Mulacek objected to the terms of the original offer.

In July, the world's largest oil and gas company agreed to buy out InterOil for $US2.5 billion.

Mr Mulacek, who left in 2013 but remains the third-largest shareholder, claimed the deal was inadequate for his company's shareholders.

However Exxon last week increased the amount of gas reserves for which it would pay a bonus to shareholders, essentially boosting its maximum offer by 9.8 percent.

The terms of the new deal had been approved by a transaction committee

But Bloomberg reports Mr Mulacek as saying Exxon still isn't offering shareholders full value for InterOil's hydrocarbon reserves in Papua New Guinea.

A shareholder vote on the new Exxon proposal is due in mid-February.

Exxon is looking to incorporate gas reserves in the Antelope and Elk fields in PNG's Gulf province, which InterOil has rights to, into its existing PNG liquefied natural gas LNG project.

InterOil said in a press release Friday that the Antelope well, has been drilled to 2,127 metres of its proposed 2,300-meter depth and has not hit the reservoir yet.

In 2014, InterOil sold around 40% of the Elk and Antelope fields to French major Total SA in a deal that also included contingent resource payments based on reserves.

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