Total Agrees To Pay InterOil Up To $3.6 Bln In PNG Gas Deal

(RTTNews) - InterOil Corp. (IOC) Thursday said it has agreed to sell to Total S.A. (TTA.L, TTFNF.PK, TOT) a 61.3 percent interest in Petroleum Retention License 15 or PRL15, which contains the Elk-Antelope gas fields in the Gulf Province of Papua New Guinea, for up to $3.6 billion.

The firm has also granted the French oil giant an exclusive right to negotiate a farm-in to all its exploration licenses in Papua New Guinea.

The transaction price depends on appraisal and certification of Elk-Antelope. Illustrative payments are in the range of $1.5 billion to $3.6 billion, for 5.4 trillion to 9.0 trillion cubic feet of hydrocarbon gas equivalent or tcfe.

InterOil will maintain a material 30 percent interest in integrated LNG development.

The deal is expected to be completed in the first quarter of 2014. InterOil said funds from the transaction would be applied to retire debt, explore and appraise activities and to fund the company's share of the Elk-Antelope development.

The agreement includes fixed payments to InterOil of $613 million on transaction completion, which is expected in the first quarter of 2014, $112 million on a final investment decision for a new LNG plant and $100 million at first LNG cargo from the proposed LNG facility.

Additionally, variable payments for amounts in excess of 3.5 tcfe for the gas resource will depend on certification by two independent certifiers after up to three appraisal wells drilled in PRL15.

Total has also agreed to make a payment of $100 million per tcfe for volumes over one tcfe for additional resources discovered in PRL15 from one exploration well. Any payment will be made at first gas from the proposed Elk-Antelope LNG facility.

The French oil firm will carry the cost of the drilling for the appraisal well program. The program and certification of Elk-Antelope is expected to be completed in 2015. The firm will lead construction of the proposed integrated LNG project and operate it.

InterOil was advised by Credit Suisse.

IOC closed up 0.1 percent on Thursday at $88.63.

Total settled down 1.5 percent at 42.56 euros.