Plans by France's Total and Australia-listed Oil Search to accelerate the development of the proposed Papua LNG project may be upset by the emergence overnight of an unidentified third-party bidder for InterOil.
Under a friendly takeover deal which was unveiled in May, Oil Search agreed to pay $2.2 billion to acquire all of InterOil, owner of the Elk-Antelope gas resource in Papua New Guinea, which is being eyed for development to supply a two-train Papua LNG project.
Oil Search then plans to sell down its stake in InterOil's assets to Total, leaving the Papua LNG joint venture better aligned to pursue possible integration with ExxonMobil's operating Papua New Guinea LNG facility.
In a statement late Thursday, InterOil said it had "received from a third party an unsolicited, conditional, non-binding proposal" to acquire 100% of its outstanding common shares.
"Consistent with its fiduciary responsibilities, the InterOil board of directors, in consultation with its legal and financial advisors, is carefully reviewing and considering the unsolicited proposal," the company said.
The board has also taken steps under its agreement with Oil Search to permit InterOil to engage in further discussions and negotiations with the third party.
"InterOil's board of directors does not intend to comment further on the unsolicited proposal until a transaction is negotiated with the third party or the unsolicited proposal is withdrawn," the company added.
InterOil's board has unanimously recommended the Oil Search deal, scheduled to be put to shareholders at a meeting on July 28, 2016.
Should the Oil Search acquisition and proposed equity sell-down to Total proceed, the Papua LNG joint venture would be operated by the French major with an increased stake of 48.1%.
Oil Search would retain 29% of the project and the PNG government would hold 22.5%, assuming it exercises its back-in rights. Oil Search also owns a 29% stake in the two-train PNG LNG project, which was developed by ExxonMobil at a cost of $19 billion.
PNG LNG started up in 2014 and has since been producing at well above its nameplate capacity of 6.9 million mt/year, achieving output of around 8 million mt/year in the first three months of this year.
ExxonMobil owns a 33.2% stake in PNG LNG and has been looking at options to expand the project with the addition of a third train.
The other partners are the PNG government's National Petroleum Company (16.8%), Australia's Santos (13.5%), JX Nippon Oil & Gas Exploration (4.7%) and local landowner company MRDC (2.8%).
