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Oil Search to Acquire InterOil for US$2.2 Billion

Oil Search to Acquire InterOil for US$2.2 Billion
Following the completion of the acquisition and the MoU transaction, Oil Search’s interest in the Papua LNG project will increase to 29% and Total’s stake is set to grow to 48.1%.
May 20, 2016 By Kaivalya Kandarpa Tags: OSH

Oil Search Limited (ASX:OSH) announced to the market that the company has proposed to acquire 100% of InterOil for a total transaction value of approximately US$2.2 billion. In a separate agreement, Oil Search has also executed a Memorandum of Understanding (MoU), agreeing to sell 62% of InterOil’s exploration assets for cash, thus ‘de-risking’ the acquisition.

Listed on the New York Stock Exchange, InterOil is a Canadian oil and gas company with a primary focus on the exploration and development of oil and gas fields in Papua New Guinea and the Asian regions.

The transaction has been unanimously approved by both boards. Management of InterOil strongly recommends shareholders to  approve the transaction.

InterOil Shareholders Receive 8.05 Oil Search Shares Plus a CVR

Shareholders of InterOil will receive 8.05 Oil Search shares along with a Contingent Value Right (CVR) for each InterOil share, with an implied value of the Oil Search share component valued at US$40.25 per InterOil share.

The shareholders will also gain access to the world-class PNG LNG project, along with Oil Search’s existing stake in the Papua LNG Project and the potential benefits from the integration of the two projects.

Following the completion of the acquisition and the MoU transaction, Oil Search’s interest in the Papua LNG project will increase to 29% and Total’s stake is set to grow to 48.1%.

The InterOil transaction is anticipated to be completed in the third quarter of CY2016, and is subject to InterOil shareholder and court approvals.

Oil Search’s Chairman Mr. Rick Lee commented on the agreements: “Oil Search believes that the acquisition of InterOil represents an excellent outcome for InterOil and Oil Search shareholders and enables both companies to benefit from the value created through the commercialisation of the gas resources in PRL 15. We look forward to welcoming InterOil shareholders onto our register and, together, continuing to grow in PNG.”

OSH has risen 2.03% since the announcement, and was last traded at $7.05 (as at 10:30 am (AEST)).

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Kaivalya Kandarpa Author: Kaivalya Kandarpa May 20, 2016

Kaivalya is an equity analyst and a client advisor at Wise-owl. She specialises in fundamental and technical analysis for large and mid-cap companies. Having completed her bachelor's degree in Business Administration majoring in Finance, Kaivalya has a comprehensive understanding of international stock market movements. She tracks local and overseas markets and compiles analytical reports for various industries.

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