'Getitrt2' pid='23762' datel Wrote:Hoosier, as to your item #4: "#4 - as to any upfront payments... the improvement to cash will have to be offset on the balance sheet" Are you looking at this as a negative? How would you be expecting the cash to be "offset"? I am not an expert on oil and gas industry accounting, but have been a CPA, and I would expect the cash to correspond to a major credit to shareholders equity on the balance sheet, probably after some lesser reduction of capitalized cost for development of PRL 15 for the portion being sold. There is nothing negative about that.

Get

Not looking at it as a negative... more as the "market" may view it as being a non-issue in share price valuation

I may have incorrectly read/assumed ITs "...carry for the infrastructure..." in providing upfront cash more as a loan... for IOC's expenses for the pipeline and thus to be repaid via future gas, etc...

All in all, I appreciate all of this threads discussion.

'ArtM72' pid='23765' datel Wrote:I don't quite understand how LT can state XOM will spend another $billion on E/A wells. Per p51 of the annual report: "We have spent $268.0 million on PRL 15 which includes seismic, Herd Base/Hou Creek wharf and camps, roads, FEED for wells, gas gathering, condensate stripping, and pipelines". That includes I trust the 5 completed wells. Per the presentations to Raymond James and IPAA earlier this year IOC is projecting 8 mtpa (about one million cu ft/day) will require 5 - 11 wells. Just for the sake of argument, @$25M/well (pretty high with existing infrastructure and limited testing!) that's 40 more wells! I seem to recall Antelope 1 and 2 combined for more than a mmcf/d by themselves. Seems to me a lot of LT's argument on the value of IOC's first 4 TCF (at $1.25) is that it gives the company a way to book the rest of its reserves and get the $1/mcf for the condensate. If there were a case to be made for incompetent IOC management, by God sale at that price for those reasons would be it.

Art, please read my post(s) again.  Nowhere did I state Exxon was going to spend $1 Billion on drilling at PRL 15.  What I do know is Exxon will likely carry IOC for the delineation wells and recertification (as with the required infrastructure). Interoil believes there is more than 9T's at E/A.

Also, please don't mistake my partial answers to someones elses question as my understanding or assessment of the complete value proposition for this deal.  What I can reiterate is we should expect a deal in the $1 to $1.50/mcf range .  Pavel consistently references the 5 year,  $1.20 average in the region.

Rest assured the IB's have been going through the excercise of calculating the value of the vastly different bids that were submitted.

Ok, a few thoughts:

1.  I'm assuming the value of the stock would equate to the net present value of all the cash flows from a single LNG train where IOC holds the same interest from the reservoir to the LNG sales point.  Exxon uses 8% disc factor

2.  I'm timing the capital required for a single train over 3 years of construction.   If a train costs $5.7b over the next 3 years, then the net present value of these investments would be more like $5b or so.  Depending on discount rate.

3.  I'm scheduling the operating expense in annual buckets over 25 years ...$117 million per year

4.  I then create an annual cash flow before and after 30% tax... Which adds up to something very big...it's not in front of me but you end up with a cumulative cash flow after tax, opex, and capex of $50b or so.  The cash flows are discounted back to today's dollars...and you come up with a net present value for the project.  There is no other way to do this... It just is what it is.  How you handle tax and terms can vary...but the methodology is sound.

5.  Best way to find extreme values is to run sensitivities on price, capital overruns, additional trains , etc. ...

6.  The other thing that is useful is looking at the project in 100% terms.  Meaning ..assume IOC gets 100% of the value from selling LNG and liquids, no govt't take.. This would be the absolute highest value you could get from a single train project.  Period.  I haven't done this..but will and post .

IOC provided cash flows in a pack posted end September last year.

id be extremely disappointed if we were not equity owners in the 3rd train commensurate with the PRL 15 ownership split after the sell down...otherwise what's the point?  We need a revenue stream to book reserves

hope that helps explain my logic.

(06-05-2013, 07:19 AM)ltinvest Wrote:

Art, please read my post(s) again.  Nowhere did I state Exxon was going to spend $1 Billion on drilling at PRL 15.  What I do know is Exxon will likely carry IOC for the delineation wells and recertification (as with the required infrastructure). Interoil believes there is more than 9T's at E/A.

Also, please don't mistake my partial answers to someones elses question as my understanding or assessment of the complete value proposition for this deal.  What I can reiterate is we should expect a deal in the $1 to $1.50/mcf range .  Pavel consistently references the 5 year,  $1.20 average in the region.

Rest assured the IB's have been going through the excercise of calculating the value of the vastly different bids that were submitted.

'Petro2458' pid='23772' dateline='<a href="tel:1370381 Wrote:

Ok, a few thoughts:

1.  I'm assuming the value of the stock would equate to the net present value of all the cash flows from a single LNG train where IOC holds the same interest from the reservoir to the LNG sales point.  Exxon uses 8% disc factor

2.  I'm timing the capital required for a single train over 3 years of construction.   If a train costs $5.7b over the next 3 years, then the net present value of these investments would be more like $5b or so.  Depending on discount rate.

3.  I'm scheduling the operating expense in annual buckets over 25 years ...$117 million per year

4.  I then create an annual cash flow before and after 30% tax... Which adds up to something very big...it's not in front of me but you end up with a cumulative cash flow after tax, opex, and capex of $50b or so.  The cash flows are discounted back to today's dollars...and you come up with a net present value for the project.  There is no other way to do this... It just is what it is.  How you handle tax and terms can vary...but the methodology is sound.

5.  Best way to find extreme values is to run sensitivities on price, capital overruns, additional trains , etc. ...

6.  The other thing that is useful is looking at the project in 100% terms.  Meaning ..assume IOC gets 100% of the value from selling LNG and liquids, no govt't take.. This would be the absolute highest value you could get from a single train project.  Period.  I haven't done this..but will and post .

IOC provided cash flows in a pack posted end September last year.

id be extremely disappointed if we were not equity owners in the 3rd train commensurate with the PRL 15 ownership split after the sell down...otherwise what's the point?  We need a revenue stream to book reserves

hope that helps explain my logic.

Makes great sense Petro. I might add that the present subsea pipeline is already sized to accommodate a 3rd train, so it might be quicker to cash flows than we might think. Building CSPs does not take all that long and the wells and gathering lines plus the pipeline from CSP to the coast to tie in to the present PNG LNG pipe might be able to happen in less than 2 years and I would think the 3rd train could also happen quickly. What are your timing estimates for this 3rd train given the present subsea pipeline already is big enough? Same as you say above, or sooner?

'Petro2458' pid='23779' dateline='<a href="tel:1370389 Wrote:"... if we do not own a meaningful stake in LNG production..then we trade flat until more discoveries are made.. "

Yes, this I think is crucial.