ExxonMobil Merger Deal On Track, InterOil Shareholders Vote

U.S. supermajor, ExxonMobil Corporation’s (NYSE:XOM) shares gained 0.92% on the NYSE on Sep 21, after its $2.5 billion bid to acquire Singapore's InterOil Corp. (NYSE:IOC) was approved by the shareholders of the latter. The merger, which required approval by two-thirds of InterOil shareholders, saw more than 80% of the shareholders vote in favor of the proposed transaction.

The transaction, which is expected to close by the end of September, will result in InterOil stockholders receiving ExxonMobil shares worth $45 for each InterOil share held. Additionally, ExxonMobil will pay $0.90 per million cubic feet equivalent (mcfe) for resources of over 6.2 trillion cubic feet in the Elk-Antelope gas field.

In July, Irving, TX-based ExxonMobil had placed a bid for InterOil to enhance its liquefied natural gas position in Papua New Guinea. ExxonMobil had managed to outbid French energy giant Total SA (TO:TOT) backed Oil Search’s offer of about $2.2 billion to buy part of InterOil's stake in the potentially lucrative Elk-Antelope gas field. The bidding war came to an end as Oil Search abandoned its pursuit of InterOil owing to a weaker balance sheet than its rival.

With the deal receiving the approval of InterOil shareholders, the merger is left with only its final hurdle – the transaction needs to be okayed by the Supreme Court of Yukon, where InterOil is established. After this approval, ExxonMobil, which now has a 33% share of the Papua New Guinea liquid natural gas project, will receive an additional 36.5% stake as part of the merger.

EXXON MOBIL CRP Price

EXXON MOBIL CRP Price | EXXON MOBIL CRP Quote

ExxonMobil is the world’s largest publicly traded oil company, engaged in oil and natural gas exploration and production, petroleum products refining and marketing, chemicals manufacture, and other energy-related businesses.

With an AAA credit profile and stable cash position, ExxonMobil’s balance sheet is one of the strongest in the industry. However, the company’s integrated functions make it susceptible to risk from any weakness in global economy.

As a result, ExxonMobil currently carries a Zacks Rank #3 (Hold), which implies that it will perform in line with the broader U.S. equity market over the next one to three months.

A better-ranked player from the broader energy sector would be NGL Energy Partners L.P. (NYSE:NGL) . The stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>