Exxon drops plan to acquire PPL 269

 By SHIRLEY MAULUDU

Exxonmobil has decided not to proceed with its proposed US$40 million (K92 million) acquisition in exploration permit PPL 269 in Papua New Guinea.

This comes after an announcement was made on July 26 by Australia’s oil and gas exploration firm New Guinea Energy Ltd (NGE) that its wholly-owned subsidiary, Kirkland Ltd (Kirkland) had signed an agreement with Esso PNG Robin Ltd (Esso), a subsidiary of ExxonMobil Corporation

The deal concerned the proposed sale of its 50% participating interest in petroleum prospecting Licence (PPL) 269 in Western to Esso for US$40 million. 

Certain rights and obligations under the deal do not become binding until a number of initial conditions precedent are satisfied over a period of 20 business days from July 26. 

Esso is permitted to have discussions with the operator of PPL 269 during this period, and has an absolute discretion to determine whether it is prepared to proceed with the acquisition of Kirkland’s participating interest in PPL 269 or not. The initial conditions precedent are: 

= Esso giving Kirkland a notice that Esso wishes to proceed with the transaction; 

= Kirkland obtaining the consent of the holder of the convertible bonds in NGE; and 

= NGE providing a parent company guarantee to Esso. 

If the initial conditions precedent are met, Esso will be required to pay a US$4 million (K9.2 million) deposit to Kirkland. 

If the initial conditions precedent are not satisfied or waived, the sale of Kirkland’s participating interest in PPL269 to Esso will not proceed.

Esso has advised NGE that it has been unable to reach alignment on a number of confidential commercial matters (which have not been disclosed to NGE) with the other joint ventures in PPL 269 and that Esso will not be proceeding with the sale agreement.

ExxonMobil yesterday said Esso had exercised its right not to proceed with the sales and purchase agreement with Kirkland Ltd in relation to PPL 269.