We had another roving reporter at the shareholders meeting…
He had a 30 minute talk with Wayne Andrews VP of IOC. Covered a lot of ground. Here the bullet points in no particular order.
- New rig coming maybe end of July /early Aug. The current rig will move to Antelope 2 soon, with drilling commencing the end of July. Expect drilling results from that well Sept/Oct. No need for 90 days of testing again. The new rig could go to or back to Antelope1. There is lots of horizontal drilling equipment sitting in warehouse in the US from the Haynesville Shale drilling that could be bought cheap. US rig count is down over 50% and the Haynesville Shale is not commercially viable at these NG prices. Someone will sell cheap.. So IOC could drill horizontally till they hit a permeable area or where OIl flows at Antelope1. Using the new rig and the new horizontal equipment. Could do the same at Elk 4 the horizontal drilling.
- The focus of the company is currently on finding commercial oil. Antleope 2 has the best chance for oil recovery based on its seismics. But then there’s that new rig coming so we can expect two rigs working on oil recovery in August or earlier. They see 10 rigs drilling next year as they get some deposit money from the asset sales.Then get a farm out agreement and drill even more wells at the same time. That’s next year though.
- There is an early stage feasibility study from an outside party to determine the best way to build a stripping plant. The IOC engineers have concluded it makes sense. The dates would be end of 2010 construction of the stripping plant and laying of the pipeline. All this works with the LNG plant build out. That stripping plant would start production in 2011. Thus the focus on oil recovery soon. Instant revenue.
- The deals talks continue and the finding of oil even if not commercial so far raises the IOC price per MCF. The potential deal signers had to go back for more money. Phil is doing the negotiations with the buyers. Hope to have 5 finalists in August. Expect a deal signed Sept time period.or so maybe Oct. There will be multiple deals. All deals complete by the end of the year.
- Remember BP and Shell spent decades on PNG and in 1959 BP hit oil in the Purai area, and in 2003 IOC hit oil in the Moose area. IOC ran seismics in the area between those two wells based on a Csiro Australian Engineering study and saw the reefal area and thus drilled into Elk/Antelope. And BP and Shell left PNG without finding anything..
- The Exxon deals on PNG are very bullish for IOC. Lots of fuel used in that construction process and IOC owns the monopoly refinery. Gives PNG a stamp of approval for LNG. Safe country argument. IOC’s project is cheaper than Exxon’s, because its closer to the LNG plant, and its wells are spaced closer together. Yes deals are being offered. Prices for product are based on the oil prices futures curve. So a rising oil price greatly helps IOC get more for its assets. The Exxon deals have no floor or peak prices and Exxon will not let the buyers buy into its assets. IOC wants to let their deal signers buy into the assets.No one else is offering that so that’s a positive selling feature.