Some time ago Henry Aldorf was interviewed regarding the constant short line that IOC has no reserves. Phil was part of this interview also, but got into some of his analogies that was less clear than what Henry has to say. Read this then relate it to what we know today. This is also a place Henry makes his now famous claim to 25 Ts in IOC's license areas.

"Henry Aldorf:

And drill they will. The interesting thing is that doubters claim OSH may hold and try and exercise some veto power over XOM bringing in IOC's gas. That's a pretty unsafe bet IMHO. As Henry states above and we know, IOC's gas gives PNG LNG the best chance of keeping costs in line. The writing is on the wall and PNG has made it clear; they want no cost blowouts. So PNG has a huge say in the expansion of PNG LNG. Even Mr Duma mentioned that at one point last year. They have approval for the first 2 trains but not yet for expansion. PNG wants economical future trains online ASAP.

And up to this point PNG has been more concerned about OSH's well being than they might be in the future. But Artie Somare put a limit on that interest. When PNG hocked their 17.5% holding in OSH to Abu Dhabi's IPIC as collateral for bonds they issued to IPIC to raise $1.1 billion to fund their share of PNG LNG, those bonds had an expiration; either late this year or early in 2014 (hence the importance that PNG LNG start producing in 2014). When PNG hocked this interest in OSH those shares were valued at A $4.50 or so. But to swap those shares to pay off those bonds shares have to appreciate to approx A $8.55. Goldman Sachs (yes Goldman Sachs) was PNG's advisor on this transaction and all parties likely were "sure" that value would be there because that cash flow (or anticipation thereof) would obviously cause share value to get there. So far so good as recently shares were just over A$8. If the shares don't reach that A $8.55 or so level, PNG must not only hand over the shares but they must pony up the difference. Who better than XOM and GS to make sure it works. This is also why I've said many times that there was no way IOC would beat PNG LNG to production. No way with all those bigs putting all resources toward getting PNG LNG up and running by 2014.

And now as production approaches there are rumors that someone like Woodside might pay $10-$14 to buy OSH because if the instant production and cash flow that brings. Good for OSH, PNG, GS if that happens (even rumors TOT or others might take a run at OSH). So, assuming that all happens, one way or the other PNG no longer owns 17.5% of OSH. So at this point I would think O'Neill and NEC are saying "We need to look beyond OSH". "That worked and we have our ownership in PNG LNG paid for. Yeah for us, but expansion of PNG LNG needs to be done economically and right now IOC is the key as they have lots of very cheap and valuable NG and liquids. XOM, we will approve all the trains you want, but you need to bring in IOC now."

It's a lot cheaper and more profitable for PNG to go down this path. Same goes with XOM and other partners. PNG and XOM are the very strong hands here and if PNG wants the project expanded, expanded it will be. Fat chance of someone like OSH stopping it IMHO.

http://www.arabianbusiness.com/property/article/537415-abu-dhabi-set-for-11bn-papua-new-guinea-deal

'jft310' pid='25063' datel Wrote:So Tree will they book GCA estimates or GLJ estimates.Duh!!!

When asked that question at the AGM WA was non committal on whether they would be booking anything more than  the XOM agreement.  Colin said there was a fairly broad application of the title "reserves" and IOC has been conservative in the past.

A side note, maybe related, was Jasper stated the XOM pipeline was good for 3 trains.  Rather than adding a compressor station in the Gulf or an onshore pipeline he believed a second parallel pipeline would be laid to handle more gas.