Government buys into OSL

Business, Normal

The National, Monday March 3rd, 2014

 THE government will subscribe 149.39 million shares in Oil Search Lt at A$8.20 per share, Prime Minister Peter O’Neill announced last Friday.

He said this was the deal reached by the government and the oil company.

O’Neill said the agreement was subject to the execution of a final document with the international banker UBS and the receipt of final state approvals, which were expected on or before Thursday. 

The settlement of the subscription was expected to take place by the middle of this month. 

O’Neill said: “We note that Oil Search has announced the acquisition of a 22.835% gross interest in PRL-15, which contains the Elk-Antelope discovery, through the acquisition of the Pac LNG Group Companies.

“The acquisition provides Oil Search with a strategic interest in the largest undeveloped gas resource in PNG, with significant exploration upside. 

“The government looks forward to working with Oil Search, its joint venture partners and other resource owners to develop all PNG hydrocarbon resources in the earliest practical timeframe,”  O’Neill said.

He said the government noted this month’s maturity of exchangeable bonds issued in 2009 by Independent Public Business Corporation of Papua New Guinea (IPBC) to International Petroleum Investment Corporation (IPIC).

The funds raised from IPIC issue enabled the government to fund its share of construction of PNG LNG project, which is scheduled to begin commercial production this year. 

O’Neill said IPBC received a mandatory exchange notice from IPIC in relation to IPIC EB and the exchange of relevant Oil Search shares currently held by IPBC would occur as prescribed under the IPIC EB deed. 

“We wanted to buy back the shares held by IPIC. 

“That is not possible now. But what we have agreed to is a very good outcome for the government and the people of PNG. 

“We will maintain our alliance with a strategic partner Oil Search at a price far less than the exchange price of A$8.55.

“The government looks forward to working alongside IPIC on the Oil Search share register and building on our existing strong relationship. 

“The agreements and contracts for the whole transaction including the borrowings from UBS will be tabled in Parliament in May for public purposes,” O’Neill said.