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Conference notes and comments from Nataxis Bleichroeder

October 14th, 2008 · 5 Comments

Here are some of the things that were discussed.

Second hand, but from a reliable source. We make some comments between [brackets, in red]

  • Quarterly results will be out on Nov 10th, 65% of the refinery output is diesel where crack spreads are wide [which will set us up for another profitable quarter, as we keep saying, the refinery has turned around structurally]
  • The change in the company financial is due to the de-leveraging the balance sheet in May.
  • Elk and Antelope have common contacts, this is the second discovery Elk 1 flowed at 102. Two wells flow over 100MMcf/d. Elk 4 restricted due to a small pipe at the bottom, still flowed 105MMcf/d.
  • Antelope will spud this week.
  • NG to liquids has risen measured from 5 to 18 barrels. This condensate will generate cash flow before the LNG plant.
  • The matrix does flow not fractures, IOC has third party tests on the matrix. [This is very important, matrix porosity is much higher, allowing for much better gas flow rates and much higher resource estimations. Antelope1 targets the reef structure, which has the highest porosity]
  • Both reservoirs are linked do communicate, Antelope 1 is the middle of the pear not the side, therefore it should be 300% bigger than Elk 4 reports.The pipe will be larger here 9 inches [This also matters a lot].
  • Total they have 3-11 T’s, Antelope is 3-9 of that, this reef is high deliverability, the porosity is the key [We are somewhat puzzled by this, the previous estimate was 8-12Tcf]
  • This is an updip formation with NG on top and maybe oil in the lower end. The updip is 2200 feet. Full of pay.
  • Antelope will further establish the column, the condensate, the shallow water to off shore reef formation, storage.
  • The goal is to have a more than surplus of NG for the LNG after Antelope.
  • An investment in IOC is derisked due to the refinery. The ability of that refinery to take condensate right now [The latter is something we didn’t know, and that’s good news!]
  • The Pre Feed for the LNG is done. They are doing that Feed work now for the LNG plant. They have 11Tcf they feel with the other fields having 25 t’s of NG.
  • ENI stated they see 4 trains above Exxon on the island.
  • Shell did a Coal Based Methane deal last week. The last two weeks Phils phone has been ringing off the hook due to the low labor costs, on shore vs off shore, no environmental issues like CO2, [We continue to argue (here, and here) that IOC’s LNG project is very competitive on basically all counts]
  • IOC is the low cost provider and the only one in the world without a deal for the LNG plant. IOC has a 30 fold facility advantage vs its competitors. They have 30% of the final LNG number needed for sure and other getting deals have 8-12%. IOC gets a deal..[The odds are indeed very good]
  • They are on their 9th draft of an agreement with the Government. Signing soon in the 4th quarter.
  • Another deal they expect is the stair stepped Farm Out agreement. Phil wants that to be for 5%…(.Expects $75-$100 mill up front on signing my add)
  • Wells has not sold, Pickens may have been forced to sell some, not clear at the moment.

Tags: IOC

5 responses so far ↓

  • 1 Jim Tate // Oct 14, 2008 at 11:44 pm

    Good notes as always..

  • 2 rory mcgowan // Oct 14, 2008 at 11:50 pm

    How long will it take to get the stripping done and move it to the refinery? What have they done so far to effect that? Is ENI there partner ?

  • 3 Janine // Oct 15, 2008 at 1:45 am

    The shorts were extremely lucky. 3 events will happen this quarter, 3rd party verification/Deal with the Gov/Strategic partner. Also,if we are lucky a long term distribution deal with an Asian partner. Patience…. Better money to be made hear than any company I know of.

  • 4 admin // Oct 15, 2008 at 3:15 am

    Good question Rory, we are waiting for an updated report on the liquids.

    Yes Janine, the shorts were saved by the bell, for now. Another round is beginning though..

  • 5 Brent // Oct 15, 2008 at 4:52 am

    “Total they have 3-11 T’s, Antelope is 3-9 of that”? This doesn’t make sense to me…does that mean Elk is now estimated at 0-2 Ts? That doesn’t seem right…I guess the Sewell report will provide some visibility to this soon enough but don’t like the way the numbers appear to be coming down from earlier estimates.

    Is there any sense that an agreement that may have been signed in the 4th quarter will now await the outcome of the Antelope drilling results?