Brief OSH legal fight article

[Tree]

Hey Mr. Botten, if not TOT then who?

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Oil Search in legal fight against Total stake deal

By Russell Searancke Singapore

 04 April 2014 00:00 GMT

Papua New Guinea’s Oil Search, fresh from its US$900 million acquisition of an interest in the Elk-Antelope gas fields, has taken legal action in protest against Interoil’s sale to Total of an interest in the same asset.

On 26 March, Total secured a 40.1% interest in the Elk-Antelope complex in Block PRL 15 by purchasing a wholly-owned entity of Canadian company Inter­Oil called SPI (208) Ltd.

However, the terms of Oil Search’s earlier acquisition of its 22.8% interest from Pacific LNG Group included a pre-emption right to any other equity up for sale.

Oil Search said it had issued a notice of dispute to InterOil pursuant to the PRL 15 joint venture operating agreement.

The dispute, it added, related to the 26 March transaction.

Sources said Oil Search believes the formation of a new vehicle, followed by the transfer of an interest in PRL 15 into it, and the subsequent sale to Total, is not valid and was done to circumvent Oil Search’s pre-emption rights.

The 26 March transaction saw Total taking up a smaller equity interest in Elk-Antelope than it had provisionally agreed last December with InterOil.

Elk-Antelope is earmarked as the feedstock source for a liquefied natural gas project.

Total had provisionally agreed last December to acquire up to 61.3% of InterOil’s equity in PRL 15, but then Oil Search swooped on Pacific LNG’s 22.8% stake, forcing Total and InterOil to revise their agreement, which had been conditional on Total and/or InterOil acquiring Pacific LNG’s stake.

The terms of the latest deal between InterOil and Total would require Total making an immediate payment of $401 million plus $73 million on a final investment decision for an Elk-Antelope LNG project, followed by US$65 million on the delivery of the first LNG cargo.

In a separate transaction also on 26 March, InterOil said it paid $41.53 million for an additional 1.0536% from minority interest holders in PRL 15.

The ownership of PRL 15 stands at Total on 40.1%, InterOil with 36.6%, Oil Search on 22.8% and indirect participation interests with 0.5%.

[Palm]

Man Russell, how many ways can you twist things? Oh that's right, you haven't actually put your eyes on the JVOA or gotten a legal opinion. You're a journalist regurgitating information fed to you by sources (per your comments). ".... any other equity up for sale"? That's sounds like someone's interpretation, not language even in a model industry JVOA.

".... was done to circumvent Oil Search's preemptive rights." Hmmmm sounds like someone is spilling OSH's main argument for the Dispute. Problem is IOC can most likely document the history of its corporate structure and the fact that it had forethought on how splits would be done in the most clean way. OSH will have a bit of a challenge establishing that intent.

And of course the Dispute pertains to the March 26 transaction. Why? Because the companies that OSH bought failed to claim their preemptive rights within 30 days. So now OSH thinks that the final SPA was materially different as far as the offer amounts, than the original SPA. Again, that may be hard to establish since the amounts were simply scaled to the final % Total bought, so IOC will obviously argue that the companies which OSH bought are still bound to the original SPA date of December 6th, and again, those rights expired 30 days later.

Just more of the game of spilling info to the press hoping to put pressure on IOC's pps IMHO (really what else would they hope to accomplish with an article like this?). They don't want arbitration any more than anyone else.

So Hession has his story out saying how they look forward to the drilling campaign and developing a project in the Gulf. It's like the normal tennis match you see in the press when big deals are in the works. So IOC and Total can continue moving ahead with their plan. IOC drills during this time outside PRL 15 out of reach of any injunction OSH might file to stop development within PRL 15. Should they prove up even a moderate amount with any of these three wells it helps justify a new plant in Gulf all the more.

The ball boys (the press) may be busy for a little while.

[sydbod]

Palm, just a technicality, a "pre-emption right" can only be triggered at the time it happens, and not at the time of the planning for it to happen, ie: not at the " Because the companies that OSH bought failed to claim their preemptive rights within 30 days". At this point there was no trigger for their "pre-emption right".

[Palm]

Yeah well it was getting late and my eyes were half mast. The point is that Dec 6th was a trigger for the 30 day "window" to be open for the PAC LNG companies acquired by OSH. For OSH to establish that these companies have a new 30-day window will be a bit of a challenge, but obviously that's one arguement they will try and hang their hat on.

[jft310]

The law works on intent. Think intent to murder. Do people go to jail for intent well yes.

For those not awake the public filing of the intent to close a deal with Total would be the trigger date.Thats Dec 6th. OSH is just wanting negotiations which are taking place . Time is on IOCs side , the drill bits go lower everyday.

[sydbod]

Why do I always get booked for speeding, when it is obvious that I always intend to stay within the speed limit.

[jft310]

Syd- your loyalties to OSH are long and well displayed and that investment has treated you well . You have a bias towards OSH . That's ok!, understand this is an IOC message board and we have different perspectives than you and your loyalties.

[sydbod]

I appreciate your reply jft310. What you say is 100% correct. I also have a vested interest in IOC shares. I did not get the full amount I wanted as the price started to climb above what I had planned to pay for them, but the amount is still significant for a person like me. I am trying very hard to put forward a balanced face although currently my financial interest in OSH is a bit greater than in IOC.

[katytrader]

I appreciate your reply jft310. What you say is 100% correct. I also have a vested interest in IOC shares. I did not get the full amount I wanted as the price started to climb above what I had planned to pay for them, but the amount is still significant for a person like me. I am trying very hard to put forward a balanced face although currently my financial interest in OSH is a bit greater than in IOC.

Syd, fwiw, your perspective (even when "unbalanced"...lol) is worth more than a lot of content-free rah-rahs.

katytrader