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InterOil Corporation Message Board

  • pickboone pickboone Mar 6, 2013 7:03 AM Flag

    Oil Search preparing to bid for InterOil?

    In last night's Islands Business article titled "OIL Search Limited worth more than US$10 billion after 20 years: Botten", Oil Search's Managing Director Peter Botten makes it crystal clear that he intends to try to acquire InterOil.

    “If Oil Search was to keep growing in PNG it has to make major acquisitions and it has to buy the major companies,” Botten says. (What major hydrocarbon companies other than the mega PNG LNG partners, Talisman and InterOil could he be referring to? Talisman and the PNG LNG partners have only a fraction of their resources in PNG, so Botten must be referring to InterOil.)

    “Over the next 18 months, the programmes we’ve got going now are very much going to test the full potential, certainly of our part of the PNG highlands,” he says. (Botten is finally acknowledging that the full potential of the PNG highlands has been exploited, and he is seeking to diversify. We know that the Gulf is a focal point for Oil Search's future exploration activity. This statement is further evidence that Botten is referring to InterOil in his previous quote.)

    A move to acquire InterOil would be a brilliant one for Oil Search, as it could exploit a major arbitrage between the two companies' valuations, reverse its recent lack of exploration success, fuel cash flow growth beyond the first two PNG LNG trains, and accelerate the development of Triceratops by diverting gas from the Gulf to additional PNG LNG trains. Oil Search has less resources on a BOE equivalent basis than just InterOil's Elk/Antelope reservoir, approximately half the stake in PNG LNG (29%) that InterOil has in its Gulf LNG Project, and approximately 3X InterOil's market capitalization. Interestingly, on slide 27 of Oil's Search's new presentation issued today titled "Gas Growth - Gulf of Papua", the company acknowledges, "Gulf area has significant resource potential...Also unexplored potential in large onshore licence areas adjoining InterOil exploration acreage"

    Sentiment: Strong Buy

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