(05-25-2016, 09:02 AM)admin Wrote:

I'm afraid I have no idea, Katy. But Phil made the argument that the final certification, a couple of years into production, is likely to yield a substantially bigger resource number and we're giving that up in advance with this deal.

I have no idea whether he is right, but I do know it's not uncommon for gas resources to turn out to be considerably bigger after production has started. Gas that has been taken out can be replenished from lesser quality rock when the resource pressure lowers.

Also consider that since we do not know what PM was demanding when he was trying to deal, we don't know that this idea ever occurred to him.  We will never know that either.   In the absence of any evidence, I view it as simply a talking point.

Perhaps in one of the analyst reports there may be an ascribed value to the post-production certification angle, but I doubt if it is much if even considered.  So I don't worry about it.

Sir Pet - here's a link to more than you ever wanted to know about CVR's.  Apparently CVR's were developed in the 80's and were used almost exclusively by pharmaceutical and healthcare companies for mergers and acquisition's.  Recently they've come into use in other sectors to enhance a deal.

https://www.sullcrom.com/files/upload/Aquila_Sawyer_Lexis_CVRs_09-2009.pdf

(05-25-2016, 06:37 AM)petrengr1 Wrote:

Am I confused about how this OSH buyout would work?

If OSH buys IOC then they should be entitled to all of the benfits listed in the SPA between IOC and Total.

So OSH would get the "full" interium resource payment, the FID payment, the first cargo payment and the right to the second resource assessment after production begins.

So the only people being screwed here are the IOC shareholders. At the present time we own all of the above. We are just not being paid for all that OSH is getting. The IOC shareholders arem getting another "transformational" deal.

IOC get's OSH + CVR.  and that includes all of the above and a 1++ Billion cash machine with a real CEO.

'Putncalls' pid='70491' dateline='<a href="tel:1464135 Wrote:

[quote='petrengr1' pid='70467' dateline='1464122263']

Am I confused about how this OSH buyout would work?

If OSH buys IOC then they should be entitled to all of the benfits listed in the SPA between IOC and Total.

So OSH would get the "full" interium resource payment, the FID payment, the first cargo payment and the right to the second resource assessment after production begins.

So the only people being screwed here are the IOC shareholders. At the present time we own all of the above. We are just not being paid for all that OSH is getting. The IOC shareholders arem getting another "transformational" deal.

IOC get's OSH + CVR.  and that includes all of the above and a 1++ Billion cash machine with a real CEO.

*****

That's true, but it misses the point. The relevant question is "how much" of OSH is fair.  We got 8 shares. Your statement would be true even if we only got 4 share.  The amount is what matters.  13 shares of OSH + the CRV would make your statements true as well.

'katytrader' pid='70487' datel Wrote:

I accept the argument about post-production data.  My point is, if you have no idea (and I certainly have no idea), then why worry about it?  Hession and TOT probably agreed this because neither of them had any idea but it could be used by both sides to justify some aspects of the deal they made.  We will never know.

Also consider that since we do not know what PM was demanding when he was trying to deal, we don't know that this idea ever occurred to him.  We will never know that either.   In the absence of any evidence, I view it as simply a talking point.

Perhaps in one of the analyst reports there may be an ascribed value to the post-production certification angle, but I doubt if it is much if even considered.  So I don't worry about it.

But I do worry about it as I feel it could be rather a big deal.

'katytrader' pid='70487' datel Wrote:

'admin' pid='70482' datel Wrote:

I'm afraid I have no idea, Katy. But Phil made the argument that the final certification, a couple of years into production, is likely to yield a substantially bigger resource number and we're giving that up in advance with this deal.

I have no idea whether he is right, but I do know it's not uncommon for gas resources to turn out to be considerably bigger after production has started. Gas that has been taken out can be replenished from lesser quality rock when the resource pressure lowers.

  I accept the argument about post-production data.  My point is, if you have no idea (and I certainly have no idea), then why worry about it?  Hession and TOT probably agreed this because neither of them had any idea but it could be used by both sides to justify some aspects of the deal they made.  We will never know.

Also consider that since we do not know what PM was demanding when he was trying to deal, we don't know that this idea ever occurred to him.  We will never know that either.   In the absence of any evidence, I view it as simply a talking point.

Perhaps in one of the analyst reports there may be an ascribed value to the post-production certification angle, but I doubt if it is much if even considered.  So I don't worry about it.

'admin' pid='70497' datel Wrote:

'katytrader' pid='70487' datel Wrote:

I accept the argument about post-production data.  My point is, if you have no idea (and I certainly have no idea), then why worry about it?  Hession and TOT probably agreed this because neither of them had any idea but it could be used by both sides to justify some aspects of the deal they made.  We will never know.

Also consider that since we do not know what PM was demanding when he was trying to deal, we don't know that this idea ever occurred to him.  We will never know that either.   In the absence of any evidence, I view it as simply a talking point.

Perhaps in one of the analyst reports there may be an ascribed value to the post-production certification angle, but I doubt if it is much if even considered.  So I don't worry about it.

But I do worry about it as I feel it could be rather a big deal.

OK.  Then bracket the numbers in marginal $$/sh in context of what we (don't) know right now.

'admin' pid='70472' datel Wrote:

'petrengr1' pid='70470' datel Wrote:

This deal is unlike any I have ever heard of. Normally we should get a cash amount, a stock amount or some of both. But you can calculate what you are receiving. In this case we do not know what we are selling for. It may be $40.25/sh if the resource volume is 6.2 TCF. Or it may be some unknown amount higher at sometime in the future if the resource volume is higher. But we don't know when or how much we will receive on the buyout.

I don't remember ever selling anything that I did not know the amount I was selling for.

In a way, we've done it before with the SPA for PRL15, but not for the whole company.

Do you think Phil has a point when he argues that there might be a large gap between the interim certification and the final certification (under the SPA)?

Phil seems to argue the latter, executed a couple of years into production, could be much higher at 12 or even 15Tcf, versus 7Tcf now (these were the figures he mentioned, if my memory doesn't deceive me).

"In a way, we've done it before with the SPA for PRL15, but not for the whole company."

Yes, you are right. I remember the day well. December 6, 2013. When the deal was announced the stock dropped $33/sh the first day and another$10/sh in the first month to cut the stock price in half, from $88.63/sh  to $45.17/sh. Over the next 2 1/2 years the stock continued to drop to a closing low of $22.37 on Jan.20th of 2016. Hession gave Total the first 3 1/2 TCF to make the "transformational" deal. Now Hession has signed another "transformational" deal where he has given OSH and Total much of the benefits he negotiated in the first transformatonal deal. You can make a deal with anyone if you are willing to give away enough. Of course $37 million might cloud ones judgement and sense of fairness.

Fool me once, shame on you. Fool me twice, shame on me.