NEW YORK (TheStreet) France's Total (TOT) has agreed to buy a 61.3% interest in two Papua New Guinean gas fields from InterOil (IOC), in a deal that could be worth $1.5 billion to $3.6 billion, according to the Texan company, or a substantially lower $1.2 billion, according to the French buyer.
The deal, which includes an upfront payment of $613 million, ends the seller's roughly four-year search for a partner to help fund development of the Elk-Antelope fields and provides Total with a potential new liquefied natural gas hub on the edge of Asia.
"Today's transaction was a landmark for investors, who had stuck by the company since its formation in 1997," InterOil Chairman Gaylen Byker said in a statement.
InterOil, which is incorporated in Canada, has been looking for a partner since early 2009 to help fund development of the fields it found in 2006 and 2008. The company said in March this year it was in "final discussions with multiple parties" and in May entered into exclusive - but ultimately abortive - negotiations with ExxonMobil (XOM).
Under the terms of the deal, Total will install itself as the operator of the project, the deal partners agreed in separate statements. But they differed on most other details, and notably on contingent payments for the sites' likely reserves.
InterOil claims those reserves are likely to be between 5.4 trillion and 9 trillion cubic feet of gas equivalent, resulting in contingent payments of between $675 million and $2.78 billion. It also factored into its headline figure payments of $112 million and $100 million due when Total commits to build an LNG plant to process the fields' output and makes a first LNG shipment, respectively.