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.