InterOil shareholders vote to approve second ExxonMobil deal

Shareholders of InterOil Corp. have overwhelmingly approved the transaction for sale of the company to ExxonMobil Corp. at a special meeting this week.

InterOil reported that more than 91% of the votes cast were in favor of the proposed transaction, which involves ExxonMobil taking InterOil’s 36.5% interest in Elk-Antelope field in retention lease PRL 15 in the eastern highlands of Papua New Guinea along with InterOil’s interests in surrounding exploration permits covering about 16,000 sq km.

The shareholder vote was the second in the saga of ExxonMobil’s takeover attempts of InterOil.

The first vote last year, which resulted in 80% shareholder approval, was on the ExxonMobil offer of $45/share for InterOil plus the potential for additional cash payment of $7.07/share for each trillion cubic foot of natural gas equivalent (tcfe) certified in Elk-Antelope field above 6.2 tcfe, and capped at 10 tcfe.

However the deal was successfully challenged in the courts by former InterOil Chier Executive Officer Phil Mulacek, also a significant shareholder, who called the offer vastly inadequate.

This week’s shareholder vote was based on ExxonMobil’s revised bid of $45/share plus $7.07/share for each tcfe of gas in Elk-Antelope above the 6.2 tcfe reserves figure capped at 11 tcfe. The higher cap increased the potential value from the July offer of $71.87/share to $78.94/share.

A court hearing in which InterOil is seeking a final order with respect to this amended and restated plan of arrangement is scheduled to be heard on Feb. 20.

The gas resources at Elk-Antelope are the potential feedstock for the proposed Papua LNG project, which is operated by Total SA. When the deal for InterOil is concluded, ExxonMobil will join Total and its fellow joint venture partner Oil Search Ltd. in appraising and planning the development that calls for a pipeline from the fields to an LNG plant at Caution Bay about 20 km from Port Moresby.

The plant is notionally next door to the existing ExxonMobil-operated Papua LNG plant and there will be synergies between the two projects.

ExxonMobil and Oil Search are participants in both projects.