06-19-2016, 09:57 PM
The renewed strength of the share price of takeover target InterOil Corp is signalling further pressures for Oil Search plans to take control of the company for $US2 billion, in the wake of a significant protest vote by shareholders last week.
Shares in InterOil rallied 1.8 per cent in overseas trading on Friday to end the week basically flat as the Oil Search shares slid 3 per cent, declining in line with the weaker oil price after its recent gains.
Oil Search is offering 8.05 of its shares for each share held in InterOil, along with a so-called "contingent value right", which will give InterOil shareholders access to any increase above 6.2 trillion cubic feet equivalent of oil and gas in the Elk-Antelope field in Papua New Guinea, which it is hoped will form the basis of a proposed new export gas project.
InterOil founder Phil Mulacek has been strongly critical of the Oil Search offer, which he argues undervalues the potential of the Elk-Antelope reserves, its core asset, which could be as high as 15 trillion cubic feet equivalent of oil and gas.
Advertisement
Mr Mulacek put forward several board nominees at last week's annual and special meetings of InterOil shareholders which would have given him board control if he succeeded. While his attempted board coup failed, he claimed 31 per cent of the shares voted at the meeting supported his nominees.
"It is clear to us that a substantial number of institutional and individual shareholders share our frustration and dissatisfaction with the board," Mr Mulacek said after the meeting.
Oil Search is seeking to take control of InterOil via a scheme of arrangement. Under Yukon legislation, which is where InterOil is registered, two-thirds of the votes cast must support the offer for it to succeed, which is a lower threshold than for similar votes in Australia. Even so, the high level of dissident voting at the shareholder meeting indicates that success for Oil Search is not guaranteed. InterOil shareholders are to meet on July 28 to consider the merger proposal.
Oil Search continues to argue that the development of the oil and gas assets of the Elk-Antelope acreage would be cheaper if done using some of the infrastructure of Papua New Guinea's existing gas export project, in which ExxonMobil and Oil Search are shareholders. At a time when the global gas export market is over-supplied, Oil Search claims only new projects that can be developed cheaply will proceed.
The PNG government is keen to ensure the gas export project moves forward since other oil and gas ventures, such as the Stanley project backed by Spain's Repsol​ and the ASX-listed Horizon Oil, have been stalled due to the downturn in the price of oil, despite government pressure for this project to progress.
Read more: http://www.smh.com.au/business/interoil-...z4C1eTulKl
Follow us: @smh on Twitter | sydneymorningherald on Facebook
Shares in InterOil rallied 1.8 per cent in overseas trading on Friday to end the week basically flat as the Oil Search shares slid 3 per cent, declining in line with the weaker oil price after its recent gains.
Oil Search is offering 8.05 of its shares for each share held in InterOil, along with a so-called "contingent value right", which will give InterOil shareholders access to any increase above 6.2 trillion cubic feet equivalent of oil and gas in the Elk-Antelope field in Papua New Guinea, which it is hoped will form the basis of a proposed new export gas project.
InterOil founder Phil Mulacek has been strongly critical of the Oil Search offer, which he argues undervalues the potential of the Elk-Antelope reserves, its core asset, which could be as high as 15 trillion cubic feet equivalent of oil and gas.
Advertisement
Mr Mulacek put forward several board nominees at last week's annual and special meetings of InterOil shareholders which would have given him board control if he succeeded. While his attempted board coup failed, he claimed 31 per cent of the shares voted at the meeting supported his nominees.
"It is clear to us that a substantial number of institutional and individual shareholders share our frustration and dissatisfaction with the board," Mr Mulacek said after the meeting.
Oil Search is seeking to take control of InterOil via a scheme of arrangement. Under Yukon legislation, which is where InterOil is registered, two-thirds of the votes cast must support the offer for it to succeed, which is a lower threshold than for similar votes in Australia. Even so, the high level of dissident voting at the shareholder meeting indicates that success for Oil Search is not guaranteed. InterOil shareholders are to meet on July 28 to consider the merger proposal.
Oil Search continues to argue that the development of the oil and gas assets of the Elk-Antelope acreage would be cheaper if done using some of the infrastructure of Papua New Guinea's existing gas export project, in which ExxonMobil and Oil Search are shareholders. At a time when the global gas export market is over-supplied, Oil Search claims only new projects that can be developed cheaply will proceed.
The PNG government is keen to ensure the gas export project moves forward since other oil and gas ventures, such as the Stanley project backed by Spain's Repsol​ and the ASX-listed Horizon Oil, have been stalled due to the downturn in the price of oil, despite government pressure for this project to progress.
Read more: http://www.smh.com.au/business/interoil-...z4C1eTulKl
Follow us: @smh on Twitter | sydneymorningherald on Facebook
