Name: Exxon outbids Oil Search for InterOil
Brand: Wood Mackenzie
SKU: 47371
Price: 1650 USD
Availability: OnlineOnly
Author: Wood Mackenzie

Deal Insight 08 August 2016

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Report summary

ExxonMobil is to acquire InterOil, after outbidding Oil Search. The prize is LNG. PRL15 is an undeveloped multi-tcf gas discovery, earmarked to supply some of the lowest breakeven pre-FID LNG projects globally. There are still huge uncertainties as to how development of PRL15 will play out. Our base case has assumed a two-train, greenfield LNG development – Papua LNG. The entrance of ExxonMobil, which operates the competing PNG LNG project, almost certainly changes the story. Nonetheless (and to some extent because of these uncertainties), we think the deal represents a big vote of confidence in: 1) long-term LNG demand, despite near-term over-supply; 2) the global competitiveness of Papua New Guinea LNG specifically; 3) yet-to-find resource upside on the block; 4) long-term oil prices in excess of US$70/bbl.

Executive summary
Transaction details
Upstream assets
- PRL15 (Elk-Antelope)
- Other assets
Deal analysis
- Development scenarios
  - Scenario 1: Papua LNG
  - Scenario 2: integration with PNG LNG expansion
Strategic rationale
- InterOil
- ExxonMobil
- Implications for Oil Search and Total
Oil & gas pricing and assumptions

Tables and charts

This report includes the following images and tables:

Transaction details: Table 1Oil & gas pricing and assumptions: Table 1Oil & gas pricing and assumptions: Table 2Strategic rationale: Table 1Deal analysis: Table 1