From The Australian Business Review

The long-running saga over Oil Search’s partner in the Elk-Antelope field in Papua New Guinea, InterOil, has taken another twist, with a Yukon appeals court overturning approval of Exxon Mobil’s $4 billion takeover of InterOil after an appeal by the target’s founder, Phil Mulacek.

InterOil on Friday said a Yukon appeals court overturned approval for its tie-up but said it will find a new path to closing the deal.

Shares of New York-listed InterOil dropped 5.8 per cent to $45.75 on Friday.

Oil Search (OSH) had previously bid for InterOil but was trumped by Exxon, Oil Search’s operating partner in the PNG LNG project. But the deal was still seen as positive for Oil Search because it increased the chance the Total-operated Elk-Antelope — known as Papua LNG — will be developed using existing PNG LNG infrastructure.

“This is somewhat of a surprise as we had anticipated the appeal would be dismissed, with Interoil shareholders voting more than 80 per cent in favour of the deal in September,” said RBC analyst Ben Wilson.

“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.”

At worst, Mr Wilson said, Exxon could walk away from the deal, reducing the chance of collaboration.

The Court of Appeal of Yukon upheld the appeal lodged by Phil Mulacek and overturned the Supreme Court of Yukon’s approval of the pending transaction with Exxon on Oct. 7. InterOil said it believes the current agreement “represents compelling value for all InterOil shareholders” and InterOil and ExxonMobil are considering the ruling and determining a different path.

The boards of Exxon and InterOil unanimously approved terms of the $45-a-share agreement that has the potential for an additional cash payment. At the time, the deal was expected to close in September, subject to shareholder and regulatory review.



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