Sorry Chaps, this was missed while on vacay. We should know much more in 11 to 41 days.

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Interoil receives final bids for Gulf LNG from prospective partners

By Russell Searancke Wellington

07 March 2013 23:59 GMT

InterOil has received final binding offers from potential partners for the Gulf liquefied natural gas project in Papua New Guinea, and is also claiming to have boosted the project’s gas reserves by 10%.

Final bids were submitted on 28 February, and the US-based player reiterated that interest was shown by international oil companies, national oil companies and global utility companies.

InterOil did not disclose how many final offers were received, saying only that “several” bids had been received.

The project must introduce a recognised international operator in order to receive the PNG government’s final approval to proceed.

“I know that you are all awaiting the announcements on the asset sell-down process, and I can assure you that we are all excited about our future, especially given the certified resources that we have,” said InterOil’s chief financial officer Collin Francis Visaggio.

“Our board intends to meet our advisors during March for the purpose of evaluating the proposals received and selecting our partner for the development of the LNG project.

“The asset sell-down, once completed, will fund the Gulf LNG project and our longer-term exploration programme,” said Visaggio.

The company did not put a deadline on the sale process.

The project’s current shape — as provisionally approved by the government in November 2012 — involves a single onshore train of 3.8 million tonnes per annum of LNG, coming on stream in 2016, followed by a second identical train two years later.

InterOil’s most recent capital cost guidance for two trains was between $8.3 billion and $9.3 billion.

The Canadian company has battled against market pessimism about the project for years, but Interoil has always believed in its feedstock — the Elk-Antelope fields — and has been drilling wells regularly in support of this.

Chief executive Phil Mulacek said that, based on the two wells drilled last year, Antelope-3 and Triceratops-2, a new independent reserves report by GLJ Petroleum Consultants gave the Elk-Antelope and Triceratops fields a best-case contingent resource of 9.45 trillion cubic feet of gas and 143.6 million barrels of condensate, 10% higher than previously.

InterOil’s latest drilling rig, Rig 3, is now rigged up and on location at the Elk-3 well.

The context of Phil's answer of 30-60 days was a nicer way of saying 'How long is a piece of string Pavel?' twice. It is impossible to seperate the 'sales process' from the partner/technology and construction path. The 'sales process' reveals the partner/technology/construction answers. Phil went off script to answer Pavel who asked 2 impossible questions to answer as IOC hadn't even seen the bids! Phil told Pavel 'That's like asking how long a piece of string is' at the first question and Pavel followed up with another question asking Phil how long the string is.

There has been initial bid presentations and there will be counter proposals and attempts by IBs to raise the bid terms of all the bidders. That will take time and it could be completed anyday or in 6 mos. No one knows for sure.

"However, the question he was responding to was NOT the one specifically about the "sale process", but rather the more extended process of determining with the new partner the technology and construction path and time frame for the LNG plant, moving toward FID; and I don't think linking that response and time frame, a more extended "deadline", to this article and the "sale process" is any more appropriate than saying they put any deadline on it."

We have partner selection in March and I think the bids are firm, no back and forth. It was give it your best shot. Where does it say otherwise?

“Our board intends to meet our advisors during March for the purpose of evaluating the proposals received and selecting our partner for the development of the LNG project.

We have partner selection in March and I think the bids are firm, no back and forth. It was give it your best shot. Where does it say otherwise?

“Our board intends to meet our advisors during March for the purpose of evaluating the proposals received and selecting our partner for the development of the LNG project.

Eller, did you happen to catch this Q by McDougall who just penned the best analysis of IOC I've seen? How else do you explain it? Unless a bidder met IOC's asking price/terms I would expect IB's to solicit re-bids within a reasonable time window. They get paid commission and they only sell this once. To expect IOC to operate on firm timelines which they never laid out for this bid consideration is foolish. It can be completed anyday, just not by some specific date. USE or FLUSH as normal with all I or anyone posts.

I'm looking forward to hearing the results on the bidding process. I wanted to understand a little bit of the process with communicating with the market over the next few months, will it be kind of one update at the end when you accept the bid? Or will there be some interim updates?

I mean, as we need to disclose under law, we'll complete and comply with proper disclosure. We -- it's -- I don't want to say it's too premature, but we wouldn't want to talk and be prejudicial where any comments affect the final outcome. I mean we have waited this long. We have never had better interest. LNG prices this winter have been some of the highest. We saw over $20. We saw $19 earlier this month, $19.50. And when everyone was claiming 6 months ago, we're going to see some U.S. parity and that was an absolute falsehood. So I mean we're coming together on the timing at no better -- we don't want to jeopardize that. So as we have requirements, we'll complete and we'll announce it to the market.

Eller, did you happen to catch this Q by McDougall who just penned the best analysis of IOC I've seen? How else do you explain it? Unless a bidder met IOC's asking price/terms I would expect IB's to silicit re-bids within a reasonable time window. They get paid commission and they only sell this once. To expect IOC to operate on firm timelines which they never laid out for this bid consideration is foolish. It can be completed anyday, just by some specific date. USE or FLUSH as normal with all I or anyone posts.

Tree, thanks although it is a muddle. My take away was McDougall mentioned a few months not Phil. Phil's comment about affecting the final outcome doesn't pertain to a timeline so I think March is still a good bet.

I reserve the right to be humiliated when March comes and goes without a partner but I have drawn my line in the sand.

Agree on the muddle, I should have left Phil's answer out (hoho) as the key is McDougall as he assigns a few month time frame to the bid process. Either he picked that up from conversations with management or he has been through enough of these situations to know how they play out. McDougall is ready to allow a few months for the bid to be announced and this was before he released his report with a $115 target.

“Our board intends to meet our advisors during March for the purpose of evaluating the proposals received and selecting our partner for the development of the LNG project."

"Thanks, Phil, and welcome to everyone listening to today's presentation. You can see from our filed financials, we continue to progress and expand on the Gulf LNG Project to monetize existing, resources, and we also continue to invest in our exploration portfolio, which David Holland will cover in more detail. I know that you are all eagerly awaiting the announcements on the asset sell-down process, and I can assure you that we are all excited about our future, especially given the certified resources that we have.

As publicly disclosed and highlighted by Phil, the final bid solicitation period for the partnering process will close today, and our board intends to meet our advisors during March for the purpose of evaluating the proposals received and selecting our partner for the development of the LNG project. The asset sell-down, once completed, will fund the Gulf LNG Project and our longer-term exploration program. The timing and execution of agreements will be advised in accordance with our continuous disclosure requirements. Also, we may not extend existing agreements as we move forward towards an integrated LNG project and conclude documentation with the selected strategic partner."

Then on March 1 in the official PR announcing that final bids had been received they stated:

"The InterOil Board of Directors will meet the Company’s advisors during March 2013 for the purpose of evaluating bids received for the development of the Gulf LNG Project utilising gas from the Elk and Antelope fields in Papua New Guinea."

That's the official, official, official filed with SEDAR/SEC company line; no mention of "selecting". Probably a wise move.