Oil Search,Total Sign Deal On Acquisition Of InterOil Assets In Papua New Guinea

(RTTNews) - Oil Search Limited and Total SA (TTA.L, TOT) said that they have entered into an exclusive Memorandum of Understanding. This follows Oil Search's agreement to acquire InterOil Corp., announced earlier today.

The MoU sets out the principles on which Oil Search will sell down 60% of InterOil's interests in PRL 15 and 62% of InterOil's interests in its other exploration assets to Total following the successful completion of Oil Search's acquisition of InterOil. The terms of the sell down will be consistent with the value implied under the InterOil transaction. Oil Search and Total will seek to maximise the value for all stakeholders by pursuing cooperation and/or integration opportunities with the PNG LNG Project. The MoU is expected to deliver significant value to Oil Search, InterOil and Total shareholders: Immediately de-risks Oil Search's acquisition of InterOil through the PRL 15 sell-down process, delivering certainty and incremental liquidity for Oil Search and InterOil shareholders; Establishes an aligned partnership between Total and Oil Search, with material interests in the Papua LNG Project, while also providing the possibility of bringing in new partners including LNG buyers. In a standalone project case, aligns Total and Oil Search to deliver a robust LNG project with equity available for buyers and potential new participants.

Oil Search and Total have agreed that Total's acquisition of equity in PRL 15 and InterOil's exploration assets will be on the same terms as Oil Search's proposed acquisition of InterOil announced earlier today. The transaction is anticipated to occur shortly after completion of the proposed acquisition of InterOil. Following completion of the sell-down process, Oil Search and Total will share, on a pro rata basis, all costs and liabilities in respect of acquiring InterOil, as well as any future Contingent Value Rights payable to InterOil shareholders, at or above a 2C resource of 6.5 tcfe for Elk/Antelope.

Following the sell-down to Total, Oil Search expects to have an equity interest in PRL 15 of up to 37.4%, or 29.0% post government back-in, with Total holding an equity interest in PRL 15 of up to 62.1%, or 48.1% post government back-in. This equates to Oil Search selling down 60% of InterOil's 36.5% (28.3% post government back-in) PRL15 interest to Total.

After paying for the additional equity in PRL 15 and equity in InterOil's exploration assets, Total will also pay Oil Search a further cash amount of US$141.6million on 1 July 2017 and US$230 million at FID for the Papua LNG Project. No further contingent resource payments or exploration carries will be due by Total.

Under the MOU, both Oil Search and Total have committed to ensuring an accurate resource certification under the Total-InterOil SPA. Oil Search and Total are committed to ensuring the interim resource certification process is transparent and focused on accurately assessing the potential resource in the Elk-Antelope gas fields for the purposes of the CVR calculation and for guiding development plans for the Papua LNG Project. This process will follow the yet-to-be formally approved Antelope-7 appraisal well program.