Somebody forwarded us a letter from Wayne. It’s certainly worth a read.
It certainly looks authentic, although we cannot 100% guarantee it’s authenticity. The question looks to be asking the amount of guarantee InterOil and Pacific are putting up for the last installment of the Flex payment to Samsung for the FLNG vessel.
We don’t know the amount, and will not know it until the vessel is delivered, that last payment is related to the final cost of the vessel. And it is not due until the vessel has been delivered and commissioned.
We are being well compensated for providing the guarantee with shares of FLEX LNG.
LNG offtake is the next step. Samsung’s guarantee of a working vessel should help us secure offtake agreements. So should our project in the Philippines.
What we said is that there would be some additional work to accommodate an almost doubling of the size of our start up project. Mitsui did not want to engineer two concepts. They did not want to design for a future possibility (Flex LNG 2 mtpa Floating LNG vessel) that may not occur. To accommodate the FLNG vessel we need to increase the size of the condensate stripping plant from 400-450 mcf/d to 650-700 mcf/d. We did not say it would take until December, only that it would take a more time. We are trying to avoid putting time frames on events we do not absolutely control ourselves. The Japanese are very precise. I think the December date the Raymond James analyst chose is conservative. Nonetheless, we increased from 2 mtpa to 3 mtpa with EWC in February. This week, we increased the size of the start-up project by another 66%, from 3 mtpa to 5 mtpa with the Samsung FLNG. We have increased the quantity of our resource dedicated to development projects from 2.25 Tcf to 4.5 Tcf, which should increase our reserve bookings once a positive FID is achieved. The cash flow projections at start up will increase at the same rate. We believe it increases the NPV of the project and our company substantially.
Additionally, as you know, we are working on offtake agreements that could include a sale of interest in Elk and Antelope. We will move the new rig in to drill development wells once the roadway is completed from the location of the CSP into the field. We will drill Bwata-2 once we complete two additional seismic lines. Seismic is the best exploration tool we have, and Bwata continues to look better than we anticipated.
I hope this helps.
V.P. Capital Markets InterOil Corp.
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The Woodlands, TX 77380 Mobile: 832-549-7898