“We’ll get to understand that acreage, and we’ll consider whether we want to maintain our equity stake or bring somebody in,” Chief Executive Officer Michael Hession said in an interview in Sydney. “People have approached us.”
The blocks cover about 4 million acres surrounding InterOil’s Elk and Antelope discoveries with Paris-based Total. Drilling in the four areas began in March as part of a $300 million program and initial results are expected in the next several weeks, the Singapore-based company said May 14.
InterOil and Total want to use supplies from the Elk and Antelope fields to develop Papua New Guinea’s second liquefied natural gas development. Exxon Mobil Corp. (XOM)’s $19 billion LNG project with partners including Oil Search Ltd. started shipments last month. Seven more gas export plants are being built in neighboring Australia to tap Asian energy demand.
An agreement in December gave Total the option to negotiate the purchase of an interest in the four licenses, according to a statement at the time.
Woodside Petroleum Ltd. may take a look at purchasing InterOil as the Perth-based oil and gas producer faces growing pressure to make an acquisition to boost reserves, according to a report in January from Macquarie Group Ltd.
“We’re demonstrating that we’re creating value,” Hession, a former executive at Woodside and BP Plc, said yesterday in the interview. “It’s a compliment when people take a look at you, but I can’t comment on potential rumors out there. I’d always want to be in charge of a company that’s seen to be valuable.”
Hession completed a revised accord with Total in March, attracting an initial $401 million for the stake from the French producer. InterOil has risen 23 percent this year in New York, closing yesterday at $63.45 and giving it a market value of $3.1 billion.
While InterOil plans to build a new export facility, it will look at opportunities to share infrastructure with other companies, Hession said. Oil Search expects two or three more LNG production units to be built in Papua New Guinea with the development of Elk and Antelope, it said in April.
InterOil is confident it will resolve a dispute lodged by Oil Search, which agreed earlier this year to acquire part of the Elk-Antelope venture, he said. Oil Search has said InterOil’s deal with Total breached its pre-emptive rights.
“We believe this will get sorted out in a sensible, commercial, rational way,” Hession said.
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