Here's Why InterOil (IOC) Stock is Soaring Today
On Friday, shares of InterOil Corporation IOC are soaring, up over 34% in morning trading after news broke that Oil Search Limited is moving to consolidate natural-gas developments in Papua New Guinea. The $2.2 billion deal was unanimously approved by both companies’ boards.
Under the terms of the deal, Oil Search will pay 8.05 shares for each InterOil share, which is valued at $40.25 per share, representing a 27% premium to the company’s closing price Thursday. Oil Search is also offering a cash alternative of roughly $770 million to shareholders.
The agreement would boost Oil Search’s exposure to what is projected to be the next big natural gas-export project to be built on Papua New Guinea, as well as provide the company an opportunity to reduce costs.
In addition, Oil Search has reached a separate deal with Total SA TOT. Oil Search is to sell the French energy company 60% interest from Petroleum Retention License (PRL) for cash and 62% of InterOil’s exploration assets. Total has agreed to pay $1.2 billion after the acquisition is completed, increasing its stake by 48% in the Papua LNG (liquified natural gas) project.
Total Chairman and CEO Patrick Pouyanné, said that “We will increase our operated interest to a more material level to drive the future development of the Papua LNG project.”
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