Company aware of OC reports

The National National

OIL Search is aware of recent media reports regarding a Union Bank of Switzerland (UBS) loan to the PNG Government.
The oil and gas firm said in a statement yesterday that it was also aware of an Ombudsman Commission report dated Dec 2018 regarding the loan.
At the time of that media release, the report had not been tabled in parliament as Oil Search and others were not contacted by the Ombudsman Commission during its investigations or given any opportunity to provide evidence or comment before issuing its final report.
Oil Search in its statement clarified some facts surrounding the loan.
The facts, according to Oil Search:

  • Oil Search was not involved in, or a party to, the UBS loan, and no allegations had been made against Oil Search or Oil Search officers;
  • in early 2014, Oil Search decided to acquire an interest in the Elk/Antelope gas fields – attractive assets which complemented Oil Search’s existing PNG assets;
  • Oil Search was well progressed in finalising funding options for the acquisition, including entering into an underwriting agreement for a share offer;
  • the PNG Government subsequently approached Oil Search and expressed interest in acquiring Oil Search shares via a share placement.

The rationale was the PNG Government wanted to maintain a shareholding in the country’s biggest oil and gas company and the largest investor in-country (noting they would no longer hold shares post the exercise of International Petroleum Investment Company’s (IPIC) exchangeable bonds); and,

  • The share placement was executed at a price of A$8.20 (about K18.5) per share.

The price was assessed by the Oil Search Board to be fair and reasonable for all Oil Search shareholders based on the alternative share issue opportunities and transactions by other companies at the time;
In relation to a comment circulating in the media about share placement to the PNG Government made to block any future takeover bids of Oil Search by IPIC, the firm said: “PNG already had the power to prevent a takeover of Oil Search regardless of the share placement to the Government, by the Takeovers Code 1998 (PNG) which at the time provided the PNG Securities Commission with the ability to prevent any takeovers on national interest grounds.
In any case, Oil Search’s board would always consider a takeover bid on its merits and have no interest in preventing a takeover which generates shareholder value.
Oil Search’s board would always consider the interests of all shareholders, when determining their attitude to any potential takeover.
“Share placements are normally executed and settled within a period of less than five days,” the statement said.
“With the knowledge that the PNG Government had to go through an extensive approval process, a generous completion period was provided, with Oil Search establishing a fall-back standby equity placement arrangement in case the relevant approvals could not be procured within the extended completion period.
“At no time did Oil Search put pressure on the Government to complete the transaction with undue haste.”