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Exxon Mobil Acquires InterOil for $2.5 Billion Exxon Mobil Acquires InterOil for $2.5 Billion
(about 2 hours later)
Exxon Mobil agreed on Thursday to buy InterOil, a driller focused on projects in Papua New Guinea, for at least $2.5 billion as the petroleum giant seeks newer fields.Exxon Mobil agreed on Thursday to buy InterOil, a driller focused on projects in Papua New Guinea, for at least $2.5 billion as the petroleum giant seeks newer fields.
Exxon beat out a competing bid by Oil Search Limited, a Papua New Guinea oil and gas exploration and development company, which had offered to pay about $2.2 billion.Exxon beat out a competing bid by Oil Search Limited, a Papua New Guinea oil and gas exploration and development company, which had offered to pay about $2.2 billion.
InterOil’s holdings in Papua New Guinea are a potential source for liquefied natural gas. The deal includes interests in six licenses in Papua New Guinea covering about four million acres, including a field called Elk-Antelope where the proposed liquefied natural gas project would be anchored.InterOil’s holdings in Papua New Guinea are a potential source for liquefied natural gas. The deal includes interests in six licenses in Papua New Guinea covering about four million acres, including a field called Elk-Antelope where the proposed liquefied natural gas project would be anchored.
Chris Finlayson, the chairman of InterOil, said, “Our board of directors thoroughly reviewed the Exxon Mobil transaction and concluded that it delivers superior value to InterOil shareholders. They will also benefit from their interest in Exxon Mobil’s diverse asset base and dividend stream.”
Under the terms of the deal, Exxon Mobil will pay $45 of newly issued stock for each share of InterOil. That’s about 8 percent lower than InterOil’s closing price on Wednesday, before the transaction was announced.Under the terms of the deal, Exxon Mobil will pay $45 of newly issued stock for each share of InterOil. That’s about 8 percent lower than InterOil’s closing price on Wednesday, before the transaction was announced.
But the deal also includes what Exxon Mobil called a “contingent resource payment” of an additional $7.07 a share in cash for every trillion cubic feet equivalent of natural gas that is certified above 6.2 trillion cubic feet equivalent, to a maximum of 10 million cubic feet.But the deal also includes what Exxon Mobil called a “contingent resource payment” of an additional $7.07 a share in cash for every trillion cubic feet equivalent of natural gas that is certified above 6.2 trillion cubic feet equivalent, to a maximum of 10 million cubic feet.
If InterOil’s holdings in the Elk-Antelope field in Papua New Guinea top out at 10 trillion cubic feet equivalent, the value of the deal would rise to $71.87 a share — or nearly 47 percent higher than the company’s Wednesday closing share price.If InterOil’s holdings in the Elk-Antelope field in Papua New Guinea top out at 10 trillion cubic feet equivalent, the value of the deal would rise to $71.87 a share — or nearly 47 percent higher than the company’s Wednesday closing share price.
“This agreement will enable Exxon Mobil to create value for the shareholders of both companies and the people of Papua New Guinea,” Rex W. Tillerson, Exxon Mobil’s chairman and chief executive, said in a statement.“This agreement will enable Exxon Mobil to create value for the shareholders of both companies and the people of Papua New Guinea,” Rex W. Tillerson, Exxon Mobil’s chairman and chief executive, said in a statement.
Exxon Mobil received legal counsel from the law firms Davis Polk & Wardwell and Blake, Cassels & Graydon. InterOil took advice from Credit Suisse, Morgan Stanley, UBS and the law firms Wachtell, Lipton, Rosen & Katz and Goodmans.Exxon Mobil received legal counsel from the law firms Davis Polk & Wardwell and Blake, Cassels & Graydon. InterOil took advice from Credit Suisse, Morgan Stanley, UBS and the law firms Wachtell, Lipton, Rosen & Katz and Goodmans.