Sydney-listed Oil Search said on Friday it agreed to pay $2.2 billion in cash and shares for New York-listed InterOil (IOC) , its partner in a massive Papua New Guinean gas field and will then sell most of the target's assets on to France's Total(TOT) - Get Report.

Oil Search will offer 8.05 shares for each InterOil share, equating to an implied value of A$55.63 ($40.24) based on the bidder's closing share price of A$6.91 on Thursday.

The offer represents a 27% premium to InterOil's Thursday closing price of $31.70 and includes the option to take at least part of the payment in cash, up to a total limit of $770 million. InterOil shareholders will also be offered a so-called contingent value right. This will pay out $6.05 per share for each trillion cubic feet above 6.2 trillion cubic feet of certified gas resources discovered at the field, which is called PRL15, known as Elk-Antelope and underpins the Papua LNG project.

"This transaction...delivers significant value to all InterOil shareholders through the opportunity to benefit from ownership of shares in the combined entity at a significant premium to the current InterOil share price," said InterOil chairman Chris Finlayson in a statement.

The transaction will leave InterOil shareholders with between 14% and 21% of the combined group, depending on the take-up of the cash option. It will need the support of two-thirds of shares voted at an InterOil meeting scheduled to take place in July.

If that deal completes, Oil Search will then sell 60% of Inter Oil's stake in Elk-Antelope, the main asset, and a further 62% of Inter Oil's exploration assets to Total. The French company will pay about $1.3 billion cash for the assets, equivalent to the implied value paid by Oil Search, and will top up the payment with an additional $372 million to buy InterOil's stake in the nearby Papua New Guinea LNG project, which is operated by ExxonMobil(XOM) - Get Report.

Oil Search and Total said they would seek closer "cooperation and/or integration opportunities" with the Exxon-operated project and could seek to bring in new partner, including LNG buyers, to help fund Elk-Antelope.

The deals end years of jockeying for greater control of Elk-Antelope and firmly establishes Total as the lead investor. The Elk-Antelope field is estimated to contain about 7 trillion cubic feet of recoverable raw gas.

Total muscled its way into the project in 2014, when it acquired a 40.1% stake in the fields from InterOil for $401 million. Oil Search sought to block the acquisition, claiming that it had a pre-emptive right to buy InterOil's assets, but failed in a legal bid to overturn the deal. Total had earlier sought to buy a 61.3% stake in Elk-Antelope from InterOil, but was outmaneuvered by Oil Search, which secured its pre-emptive right to the stake when it bought a 22.8% holding in Elk-Antelope from another investor, PAC LNG.

Total will own as much as 62.1% of Elk-Antelope following completion of the deal announced on Friday, though that stake is likely to fall to 48.1% when the Papua New Guinea government exercises its right to increase its holding in the field. Oil Search will own as much as 37.4%, or more likely 29%, following the government taking up its option.

"In line with our strategy to hold significant interest when we are operator, we will increase our operated interest to a more material level to drive the future development of the Papua LNG project, a low cost onshore LNG project close to Asian markets," said Total chairman and CEO Patrick Pouyanné in a statement.

Buying InterOil out of the project will remove possible obstacles to its development by handing Total further control. It also removes a stakeholder in InterOil whose willingness to back the development through to production was brought into question by its efforts to sell its stake, and which had recently been roiled by internal conflict after its founding shareholder and former chairman and CEO Phil Mulacek, in April, challenged management's strategy.

Elk-Antelope/Papua LNG and Exxon's similarly named PNG LNG are among the largest gas finds in Asia in the past 20 years and are expected to transform the economy of the poor island nation, making it a major player in the region's LNG supply. Oil Search's stake in the field has attracted attention from other energy companies, including Australia's Woodside Petroleum, which last year made a failed $8 billion bid for Oil Search.

Total shares traded Friday at €42.85, up €0.72, or 1.7%, on their Thursday close. Oil Search shares closed Friday at A$6.83, down A$0.08, or 1.2%. InterOil shares closed Thursday at $31.70, up 30 cents, or just under 1%, on their Wednesday close, but remain down almost 40% over the past year.