By HELEN TARAWA of The National
DEPUTY Prime Minister and Treasurer Charles Abel says Kumul Petroleum Holdings Limited will report on the net outcome of the government’s 10 per cent stake in Oil Search Limited that it has divested.
Abel told The National that KPHL was holding the debt and the shares.
The debt has been cleared and shares sold.
“The collar loan protected KPHL from some of the share price drops,” Abel said.
“They will calculate and report on the net outcome of the transaction.”
KPHL managing director Wapu Sonk said they were preparing for the PNG LNG project expansion, the Papua LNG, the power project and their own investments.
Responding to claims of the sale of shares as a rescue package for the government, Sonk said the government did not pay anything.
“This is not a rescue package because this was never on the government’s balance sheet,” Sonk said. “The government wasn’t paying anything. It was Kumul.
“We’re preparing for the PNG LNG project expansion, Papua LNG, the power project, our own investments going forward. So it’s got nothing to do with the PNG Government.”
KPHL on Friday announced that it had sold its shares in Oil Search Limited and had ceased to have any interest in the firm.
Sonk, who announced the decision in the presence of KPHL chairman Sir Moi Avei, said it would continue to be responsible for managing the State’s 16.77 per cent equity in the PNG LNG project.
“As a close partner of Oil Search in PNG, we look forward to continued cooperation on our numerous projects.”
Sonk explained that the UBS collar loan was not a normal loan.
The value of the parcel of shares on any day supports the loan itself which, in this case, was approximately 149 million shares.
A collar is a protective-options strategy that is implemented after a long position in a stock has experienced substantial gains.
Sir Moi said KPHL had made about K100 million (A$35 million) as a result of the transaction.
He said the current oil and LNG price environment and projected long-term views indicated that oil prices would remain about the same for the next few years.