ExxonMobil makes bid for InterOil to beat out Australia's OilSearch

ExxonMobil Corp has made a bid worth in excess of $2.2bn for InterOil Corp and its stake in a rich Papua New Guinea gasfield, winning the support of its target and topping an offer from Australia's Oil Search Ltd.

The bid puts ExxonMobil against Total SA, which is backing Oil Search, as the French giant aims to push forward with its planned Papua LNG project to rival ExxonMobil's existing PNG LNG project.

Oil Search, which has a stake in both projects, bid for InterOil in the hopes of joining the two LNG projects together to help cut costs and speed up development of the new gas field. ExxonMobil's move will hope to do something similar.

Papua New Guinea is thought to be one of the best locations for LNG projects because of its high quality gas, low costs and proximity to Asia's big LNG consumers.

Drilling of one more well this year could prove the field holds much more than the at least 6.2 trillion cubic feed (tcf) of gas under current estimates.

Oil Search has at least until July 21 to submit a revised offer and said it was talking to Total about making a higher bid, according to Reuters. A biddng war could begin in the coming weeks.

Analysts said Oil Search's dream of getting Total and ExxonMobil to work together could still be fulfilled even if it walks away from the bid for InterOil, handing it to ExxonMobil.

"This is obviously very positive for Interoil shareholders, but it's positive for Oil Search shareholders, too, because through Exxon coming in they get the benefit of the alignment of projects without the (share) dilution in the near term," said analyst Neil Beveridge from Bernstein.

"ExxonMobil has submitted an offer to acquire InterOil Corporation, which we believe represents a superior proposal," ExxonMobil said in an emailed statement.

The $2.2 billion valuation is based on New York-listed InterOil's 49.9 million common shares issued and outstanding. InterOil's shares last traded at $47.61.

Oil Search shares rose 2.7%