InterOil Won’t Exclude Takeover Offers
Comments by the company’s executive vice president come amid a shake-up in the global gas industry
BEIJING—InterOil Corp., the independent oil-and-gas company working with France’s Total SA to explore one of Asia’s largest undeveloped gas fields, isn’t ruling out a possible takeover if the price is right, a senior InterOil executive said.
“You never say never,” said Isikeli Taureka, InterOil’s executive vice president in an interview on the sidelines of a natural-gas conference in Beijing. “If anybody comes along and offers a price and it’s the right price, then you’ve got to take it back to the shareholders to make that decision.”
His comments came as an upheaval in global gas markets threatens to spawn a new industry consolidation.
Mr. Taureka said the company is currently focused on completing an appraisal of resources at Papua New Guinea’s onshore Elk-Antelope gas field. A spokeswoman for InterOil said there was no deal currently in the pipeline.
Industry analysts have said InterOil’s resource base in Papua New Guinea could make it a potentially attractive target for deals-hungry energy companies eager to capitalize on a drop in oil-and-gas prices that has left many firms reeling. For example, Credit Suisse has described InterOil as an “obvious choice” as a target for Australia’s Woodside Petroleum Ltd. InterOil has a market capitalization of around $2.46 billion.
“When you add it all up, a lot of people are quite envious, particularly in Elk-Antelope alone. That is probably the largest discovery in Southeast Asia for the last 20 years,” said Mr. Taureka.
InterOil is part of a joint venture with Total and Papua New Guinea’s Oil Search Ltd. to develop the reserves, and to eventually ship them to gas-hungry Asian markets in the form of liquefied natural gas. Mr. Taureka said a final-investment decision on a proposed LNG export facility would come around 2017, and that discussions to contract Asian gas buyers—particularly in China—would get under way soon. Total would serve as the operator.
‘If anybody comes along and offers a price and it’s the right price, then you’ve got to take it back to the shareholders to make that decision.’
Papua New Guinea’s significant natural-gas reserves are particularly attractive for global energy companies, given the nation’s relatively proximity to Asian gas markets such as China and Japan, and strong backing from the country’s government. Exxon Mobil Corp. began operating an LNG project in the country last year. InterOil, citing analyst estimates, says its project is one of the cheapest among its peers.
Oversupplies in global gas markets have forced companies to begin shelving planned LNG terminals. In Asia, LNG spot prices have fallen drastically: Data provider Platts said this week spot LNG prices for northeast Asia delivery in May had fallen 52.6% year-over-year to $7.38 per million British thermal units.
Today, the industry faces additional uncertainty after Royal Dutch Shell PLC’s bid to purchase the U.K.’s BG Group, in a deal valued at about $70 billion.
The bid by Shell and BG to build a new LNG giant to serve emerging energy-hungry economies in Asia and beyond could spur additional industry consolidation as smaller players look to keep up, industry executives and analysts say. While Mr. Taureka said LNG development in Papua New Guinea would remain competitive given its proximity to Asian markets, he said the Shell-BG deal presented new circumstances for the industry to adjust to.
“Obviously [it means] a new set of dynamics for all the LNG players,” he said of the deal. “They present a pretty powerful equation in the market.”
Write to Brian Spegele at brian.spegele@wsj.com
