InterOil, ExxonMobil Continue Negotiations on Gas Monetization (PNG)

InterOil Corporation announced that negotiations with ExxonMobil Papua New Guinea Ltd. (EMPNG), a subsidiary of ExxonMobil, relating to the development of Petroleum Retention License 15, were ongoing not with standing the lapse of an exclusivity arrangement.

InterOil will continue to work with EMPNG with the aim of accelerating the monetisation of its gas resources on terms that will benefit all stakeholders including Papua New Guinea.

InterOil today also announced it had finalized a $75 million secured loan facility to accelerate its exploration and drilling program.

InterOil’s Executive Vice President of Corporate Development and Government Relations, Keli Taureka, has discussed the latest developments with the Government of Papua New Guinea and the Governor of the Gulf Province. “All of InterOil’s businesses and assets are in PNG and we remain fully aligned with PNG’s ambitions to develop its natural resources. InterOil makes a significant contribution to PNG as a major employer and provider of fuel and we value our strong relations with the Government and local communities,” Mr Taureka said.

InterOil  said that the Company and its subsidiaries, InterOil Products Limited and certain Upstream Entities, have entered into a one year $75 million equivalent combined secured loan facility with Westpac Bank PNG Limited and Bank South Pacific Limited (BSP) to be drawn in tranches, either USD and/or Papua New Guinea Kina (PGK), subject to standard closing conditions.

Borrowings under the facility will be used for exploration and drilling activities with $37.5 million funding to start immediately, and a further $37.5 million upon the execution of an agreement in relation to monetization of the Elk and Antelope resource. The principal repayment will be made on the earlier of, the first resource payment or 12 months from the first drawdown.

Existing downstream working capital facilities with Westpac and BSP totalling K140.0 million have been underutilized, due to the downstream division’s prudent working capital management initiatives and strong liquidity. As such, all parties have agreed to channel existing downstream approved limits of K45.0 million to this secured loan facility. The downstream working capital facility will be kept.at the remaining K95.0 million.

Both facilities will be shared between Westpac and BSP, secured against downstream assets and undertakings, IOC parent guarantee, and guarantees from certain Upstream entities.

In announcing its 2013 second quarter results on July 13, the Company said that it would build on its success by seeking additional exploration partners.

Collin Visaggio, InterOil’s CFO remarked, “We are pleased to have strengthened our existing relationship with BSP, Papua New Guinea’s largest bank, and Westpac, one of the region’s largest lenders. “

Greg Pawson, Westpac Pacific General Manager remarked “Westpac has been part of the fabric of Papua New Guinea since 1910. For over a century we have maintained a strong interest in supporting the economic growth of the country. It follows that we’re pleased to support InterOil’s exploration efforts in PNG.”

Robin Fleming, BSP Group CEO commented “following on from our Co-Lead Arranger role in the midstream term loan syndication, BSP is delighted to support InterOil’s upstream exploration activities.” Mr Fleming also highlighted BSP’s commitment to both InterOil and the Gulf Province with the recent announcement of BSP’s agreement to open a Rural Branch in Kerema. Both Mr Visaggio and Mr Fleming believe these activities will strongly support economic development across the Province.”

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LNG World News Staff, August 23, 2013; Image: InterOil