Reuters on the refinery sale

[jft310]

InterOil to sell refining arm, focus on PNG gas hunt

Reuters | 30 June 2014, 1:50 PM IST

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By Sonali Paul

MELBOURNE: InterOil Corp has agreed to sell its Papua New Guinea oil refinery and petroleum products distribution business to Singapore-based Puma Energy Group for $526 million to focus on gas exploration.

The move could set up InterOil as a target for major oil and gas companies looking to expand into Papua New Guinea, where ExxonMobil Corp recently started exporting liquefied natural gas from its $19 billion PNG LNG project.

"It certainly increases the attractiveness of InterOil to potential M&A," said Nik Burns, an analyst at UBS. "We think there is considerable interest in their upstream business."

InterOil's main attraction is its 36 percent stake in the Elk and Antelope gas fields in PNG, where it recently brought in France's Total SA as a 40 percent partner and where Oil Search Ltd also recently bought a 23 percent stake.

"Our upstream and LNG business has become core to the company's growth and, as a result of the success we have had in discovering and monetizing gas, the time is right to focus on this part of our business," InterOil chief operating officer Jon Ozturgut said in a statement.

InterOil and Total want to develop the Elk and Antelope fields by building a new LNG project in PNG, while ExxonMobil and Oil Search see the fields as a potential source of gas for an expansion of the PNG LNG project.

Another company that has been eyeing opportunities in PNG is Australia's Woodside Petroleum, which is looking for acquisitions to fill a gap in its growth prospects.

For trading giant Trafigura's Puma Energy, the acquisition of InterOil's refining arm marks the latest in a rapid expansion following its purchase of two fuel distributors in Australia last year. It plans to fund the acquisition using available cash and bank facilities.

"This investment marks an important step in the execution of our regional strategy and offers considerable synergy with our developments in Australia and the broader Pacific region," Puma Chief Executive Pierre Eladari said in a statement.

[Palm]

I had mentioned this to some people the other day; the refinery/downstream has always been seen as a detriment to any type of merger/acquisition. I don't believe at all that mgmt is actively pursuing that, but just like the refinery sale was unsolicited.....

Uncomplicates things.

[Getitrt2]

You "got it right", Palm!

[calvin grad]

Most of us here have faith in the resource. Assuming that  one of the three wells is successful how does the sale of the refinery look then? If it is Wahoo that is successful, I  believe they can negotiate better for a sale to OSH

with an adequate cash reserve. If they find liquids will they not need some working capital to  develop and bring to market.   Positive results at any locaton means they will need to do more drilling..

I do not own this stock because they have or had a refinery in Papua New Guinea. I believe there are more resources to be discovered.and that is why I have invested more than a prudent percentage of my portfolio in IOC. The refinery

was not my hedge but rather it is what has already been proven at EA and the  deal with Total.

I hate waiting and not knowing..  I can live with it if I believe that the big boys dont know either.

[Getitrt2]

Most of us here have faith in the resource. Assuming that  one of the three wells is successful how does the sale of the refinery look then? If it is Wahoo that is successful, I  believe they can negotiate better for a sale to OSH

with an adequate cash reserve. If they find liquids will they not need some working capital to  develop and bring to market.   Positive results at any locaton means they will need to do more drilling..

I do not own this stock because they have or had a refinery in Papua New Guinea. I believe there are more resources to be discovered.and that is why I have invested more than a prudent percentage of my portfolio in IOC. The refinery

was not my hedge but rather it is what has already been proven at EA and the  deal with Total.

I hate waiting and not knowing..  I can live with it if I believe that the big boys dont know either.

I feel sure that IOC is not seeking to sell anything to OSH.

It takes much less capital to bring liquids (oil) to market than natural gas.

[jft310]

I hope this talk about liquids pans out. Sal Illaqua stated if they ever found liquids it would take 9 months to reach cash flow and the stock would jump $100 a share. I have zero idea if they have found anything including liquids

[calvin grad]

Most of us here have faith in the resource. Assuming that  one of the three wells is successful how does the sale of the refinery look then? If it is Wahoo that is successful, I  believe they can negotiate better for a sale to OSH

with an adequate cash reserve. If they find liquids will they not need some working capital to  develop and bring to market.   Positive results at any locaton means they will need to do more drilling..

I do not own this stock because they have or had a refinery in Papua New Guinea. I believe there are more resources to be discovered.and that is why I have invested more than a prudent percentage of my portfolio in IOC. The refinery

was not my hedge but rather it is what has already been proven at EA and the  deal with Total.

I hate waiting and not knowing..  I can live with it if I believe that the big boys dont know either.

I feel sure that IOC is not seeking to sell anything to OSH.

It takes much less capital to bring liquids (oil) to market than natural gas.

There are  several possibilties if they find gas at Wahoo. It is well past 30 miles from EA.  They could let Total and Osh buy in and then sell the gas to Osh or create a separate facility. Or IOC and PRE could have a separate production facility. The simple and probably economic thing is to sell the gas to OSH  for their existing plant.. Would rather they dont need to make that decision when they are pressed for cash

[ArtM72]

I feel sure that IOC is not seeking to sell anything to OSH.

It takes much less capital to bring liquids (oil) to market than natural gas.

There are  several possibilties if they find gas at Wahoo. It is well past 30 miles from EA.  They could let Total and Osh buy in and then sell the gas to Osh or create a separate facility. Or IOC and PRE could have a separate production facility. The simple and probably economic thing is to sell the gas to OSH  for their existing plant.. Would rather they dont need to make that decision when they are pressed for cash

It would seem more logical that IOC/Total would negotiate an ownership position with PNG LNG for a third unit there, with the competion/fallback being Unit 3 at Gulf LNG.