Lack of proper remuneration to InterOil shareholders cited as reason behind delay
As if the current oil downturn is not enough damage to the company, the latest upholding by the Canadian court against the sale of the Papua New Guinea-based oil & gas company InterOil Corporation (USA) (NYSE:IOC) further concerns Exxon Mobil Corporation (NYSE:XOM).
The latest appeal against the sale has been filed by InterOil Founder, Phil Mulacek. Reasons cited by Mr. Mulacek is the terms and conditions of the deal that he found to be improperly remunerating shareholders of InterOil.
The agreement initially made in July in a transaction worth $2.5 billion received final approval in October by Supreme Court of Yukon, where InterOil is registered. The news comes as a surprise as only last month majority of InterOil shareholders of around 80%, voted in the deal’s favor.
RBC analyst, Ben Wilson, stated: “At the very least we think the ruling over the weekend defers the progression of commercial negotiations between the PNG LNG joint venture, P’nyang license holders and the Papua LNG joint venture over collaboration and possible unitisation.”
The deal would have contributed positively to Exxon Mobil’s portfolio. This is because via the acquisition of InterOil, Exxon Mobil would have attained interests in six licenses accessing the company to around four million acres in PNG. More so, InterOil has the ownership of 36.5% share of interest in PNG’s Elk-Antelope gas field. Natural gas from this field is to undergo development into PNG’s second largest liquefied natural gas (LNG) project.
Amid the current low crude oil environment, hurdles in the oil producer’s efforts to save its dented financial profile is indeed sad news. Having said this, news sources state that both energy giants are “considering the court’s ruling and determining a path to closing the transaction”.