We sent a copy of the SPA to the editor of the AFR and asked them to slow down and read the SPA document and then print a retraction . This is sloppy journalism and keeps getting repeated.Enough!
Heres their most recent distortion of the SPA document.
The next few months could prove transformative for oil and gas producer Oil Search. If all the stars align, the Port Moresby-based firm will, by the end of March, control a hefty stake in the largest gas deposits ever found in Papua New Guinea and its register will be free of concerns about the conversion of an exchangeable bond owned by Abu Dhabi sovereign wealth fund.
But concerns about how the company navigates its path through this transition has sent the stock price on a bumpy ride over the past six weeks. Investors and bankers believe the convergence of both events could result in some $1.2 billion worth of stock changing hands in a simultaneous equity raise and block trade. Others however believe the two events will occur at a wide distance from each other. On December 9, Oil Search boss Peter Botten revealed the company is in negotiation for a potential 20 per cent slice of Total’s share of a joint venture with InterOil over its PNG reserves at the Elk and Antelope fields. The announcement sent the share price soaring but since then doubts about how to fund the deal and the looming conversion of the exchangeable bond have kept it on a volatility streak.
A number of hedge funds are betting on a potential block trade of the Abu Dhabi stake, which is held by the state-owned International Petroleum Investment Co (IPIC). The notes convert into equity in March at a strike rate of $8.55 although if the company’s share price falls below that level on the conversion date the PNG government must fund the difference. For a long time the consensus view has been that both sovereigns would avert a market trade and agree a deal that would enable PNG to retain its stake in Oil Search but many in the market now anticipate IPIC will sell down some of the holding to the market by the end of February. The conversion of the bond is likely to coincide with an agreement on Oil Search’s participation in the up to $3.6 billion JV between Total and InterOil. Botten’s comments this week on the continuing negotiations appear significant. InterOil is pressing Total to go unconditional on the deal by the end of the first quarter. That would tie the French giant into a large financial exposure in PNG – a costly and unpredictable territory.
Selling a slice to Oil Search not only allows Total to take money off the table, the cash could be used to mop up minority owners in Elk and Antelope, who own 20 per cent of the reserves. That in turn would benefit InterOil as eliminating the minorities is also one of the preconditions to the Total joint venture.
