'ebster123' pid='13848' datel Wrote:Unfortunate the Bloomberg article did ot mention what was stated in another article "He also expressed confidence that Papua New Guinea would be able to finance a higher share of InterOil Corp.’s natural gas assets following an agreement reached in November." Regardless of what the train mixes, regardless of who the Partner is, regardless of anything this should reinforce the shorts bogus claims. Read "would be able to finance a higher share of InterOil Corp.’s natural gas assets", the assets are there and PNG is doing their best to get them. Looks to me like the PNG GOV'T wants and needs IOC as much as IOC needs them. Symbiotic relationship will work well for both entities!!

Yes they want it and yes they will pay matching commercial rates.

The irony is PNG is motivated to have a higher buy-in $/M than a lower $/M as that places a higher value on the asset.  

Many are freaking  that this does not hold true as they fall for short rubbish.

'<strong>ArtM72' pid='13851' datel Wrote:I don't see how PNG can be motivated to have a higher $/M buy-in. That simply makes no sense when they look to control their own costs and maximizing the margins when gas is sold to others. The big question is whether PNG is taking a laissez faire position with respect to IOC negotiations in the selldown. Human nature tells me the chances of that are pretty slim. IOC's best deal would be to give/sell PNG a total of 4 TCF from E/A, with any remaining in the formation above 8 TCF the 77.5% property of IOC. That gives PNG all the gas they will need for a long time but leaves IOC with an upside. Triceratops seems to be a clean agreement with PNG at this time although there was already some suggestion new licenses will be negotiated on terms more favorable to PNG. More favorable than what? So many questions.

Hey Art,

Consider this:  In round #s, Mitsui CSP deal valued E/A at about $20 Billion.  Mitsui to receive 5% E/A for a Billion dollar CSP swap.  Roughly $2.4/M from memory.  PNG had rights to 22.5% E/A for sunk costs and those are in the hundreds of millions, or $.70/M tops.  That 22.5% chunk is worth about 4.5 $Billion.  Not bad equity position.  Spend less than a billion, receive $4.5 Billion assett.  Tremendous borrowing power for PNG and that is the benefit for a high buy in price.

If PNG opts in an additional 27.5% at any price above $.7 it increases their collateral position.  Even if PNG pays $2.5/M for that 27.5% their blended cost is  still miniscule and their borrowing power remains.  PNG likely will flip that 27.5%, or a large chunk of it, to a third entity and that will place an even higher value on their E/A ownership %.

A high $Mcf today also sets precedent for future in country sales and that is more reason for PNG to help settle IOC's stake sale at a high $Mcf.  The more it sells for, the more they can borrow and loans are re-paid by flipping chunks or from future LNG revenues.  Basically not much out of pocket needed for PNG in these transactions.  Make sense now?

Tree - You won't find me arguing that $3.25/mcf is a bad price and not good investment for PNG. I'm only saying $2.25 for the 27.5% is a better price. If I were a young guy working on behalf of PNG trying to make my mark in the world I'd look a lot more attractive to future employers by getting the $2.25 (or $1.25) for my employer.

On a different scale, if you've got 20,000 shares of this puppy would you rather see it go to $150 or $250? Just human nature getting in the way.