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+--- Thread: takeover by total? Or just more talk? (/showthread.php?tid=8486)
Total SA, Europe’s third-biggest oil company, would expand its foothold in Asia’s liquefied natural gas market by acquiring InterOil Corp., according to a report by Bloomberg Intelligence.
Total would almost double its 40 percent state in Papua New Guinea’s Elk-Antelope gas fields, which may emerge as the world’s lowest cost exporter to Asia, with a takeover of Singapore-based InterOil, Lu Wang and Philipp Chladek, analysts with BI, said in a note Tuesday. Oil Search Ltd. has a 23 percent stake in the gas field. InterOil hasn’t ruled out a takeover.
Oil giants have turned to LNG as easy-to-find crude disappears and prices tumble. Royal Dutch Shell Plc’s $70 billion bid for BG Group Plc is seen as a push for gas dominance and an effort to rebound from its worst production performance in 17 years.
Evgeniya Mazalova, a Total spokeswoman, said in an e-mail that the company doesn’t comment on market rumors. Its former senior vice president of Asia-Pacific exploration and production, Jean-Marie Guillermou, said last year the company’s 2014, $401 million purchase of a stake in the project “provides an ideal opportunity to grow our business in the Asia-Pacific region.”
Damaris Minikula, a spokesman for InterOil in Papua New Guinea, didn’t immediately respond to an e-mail seeking comment sent outside normal business hours.
The Courbevoie, France-based producer has not capitalized on the U.S. shale boom, which has led to record-high natural gas production. It will cut spending and jobs, and curtail exploration this year after Brent crude, the benchmark blend for more than half the world’s oil, slumped by half amid a supply glut, the company said in an earnings statement Tuesday.
Exxon Mobil Corp., which also operates a $19 billion LNG project in Papua New Guinea, started producing gas for buyers in Asia last year. The Irving, Texas-based company said it expects the project will produce 9 trillion cubic feet of natural gas over 30 years.
RE: takeover by total? Or just more talk? - Putncalls - 04-29-2015
How do they figure out a price? It's not like growth opportunities like IOC are growing on trees.
RE: takeover by total? Or just more talk? - johnwgrant - 04-29-2015
I love how they refer to TOTAL's purchase as costing only $401 million !!! I seem to remember that TOTAL's initial PR on this deal was deliberately (IMO) misleading regarding their cost to buy into PRL 15.
The $401 was only the DOWNPAYMENT -- wait until the final "invoice" is presented
The Indicative Payment if GCA's P50 estimate were certified as correct (7.1 Tcfe) is $1.62 Billion (with a "B"!!!). There is nothing that I am aware of that has been put forth from the drilling results that would lead me to think that the final reserve certification will be at the low end of the scale. (GLJ's P50 was/is 9.9 Tcfe = Indicative Payment of $2.74 Billion)
Note: not to be too optimistic, the $1.62 Billion does include the a) Carry (loan?), b) FID payment, and c) First Cargo payment. So, FID is implicitly assumed by me (and IOC) when they talk about "indicative payments". Be careful not to subtract $401 million from $1.62 Billion (I like to capitalize the "B"!!!) to get a check amount of $1.199 Billion. That would be incorrect! However, I still think it is going to be a big check !
So, if you are TOTAL - you have plenty of resource engineers who can read the tea leaves and will have a pretty good handle on the likely reserve certification later in 2015. What do you do? Write a big check (with more payments to follow), or, make an offer for the whole company? Remember - PRL15 is only a portion of the exploration acreage that InterOil is busy proving up.
Lastly, I seem to recall that back when the deal was struck, there was talk of TOTAL becoming a partner on the rest of the acreage (for a price). Nothing came of that - but, if I were TOTAL I would realize that the price to buy in to the rest of the acreage is going UP as soon as Wahoo, Raptor, Bobcat, Triceratops... are better explored/known. IMHO.
RE: takeover by total? Or just more talk? - Optionray - 04-29-2015
Does Total benefit in any way if IOC's PPS is 100 vs 50? For instance, does that make IOC a stronger partner, regarding financing for the plant? Does it make IOC less likely a takeover prospect by some other Energy company? Or, are there any other benefits that you can think of to Total if IOC's pps increases significantly?
It appears a push to move IOCs PPS over the next month is in place. In the past, I have seen this push followed by a sale off, leading me to believe someone with some big money was trying to influence the price while they unloading a large position. I'm wondering if this time is different and if there are any benefits to Total. My gut is telling me to load the boat rather than waiting for the next pull back.
RE: takeover by total? Or just more talk? - Stavros - 04-29-2015
The ONLY thing that makes sense to me is for TOTAL to "buy back" all their future contractual payments to IOC for the 40.1% stake AND ALSO buy out IOC's 36.5% stake AND ALSO the potential payment for anything found in Antelope Deep.
The problem, of course, is there is no clarity yet on how much TOTAL must pay to IOC (as 'johnwgrant" discussed) ... and consequently on the value of IOC's 36.5% remaining stake.
As others have stated several times on SHU, Super Majors rarely (never?) buy companies/ assets at market prices unless the resource quantities are well known and certified . . . no gambling allowed. All they could do now is agree on an E/A acquisition deal where the price is contingent on the outcome of the Resource Estimate.
Suppose the GLJ P50 estimate of 9.9 TCF turns out to be correct:
1. TOTAL's payment for 40.1% of E/A is $2.74 Billion ($2.33 Billion remaining to be paid)
2. TOTAL will pay $100 Million per TCF is Antelope Deep (my understanding); let's say AD has 2 TCF, so value = $0.2 Billion
3. IOC's 36.5% of E/A has a value - - - how much? Well, since the Risk is lower than in December 2013, let's put it at $2.75 Billion
Ergo, if I'm IOC, I'm willing to sell out fully to TOTAL for ($2.33 + $0.2 + $2.75) = $5.28 Billion for E/A (retain all other resources)
That comes to roughly $110 per IOC share
What about all the other Acres?? TOTAL will surely refuse to pay a market price and IOC will refuse anything lower than a market price. ALSO, I believe TOTAL does not want to buy those resources and inherit Mr. Civelli as a meaningful partner.
So to my view, there's a measurable possibility that at some point soon:
+ TOTAL acquires IOC's share in E/A for $110 per share
+ IOC buys PRE's share in Triceratops for $150 Million
+ IOC retains all the other Acres; Mr. Civelli also retains his share in those Fields
+ IOC pays a Special Dividend to shareholders of about $100 per share
+ The "new" IOC is now much smaller than before, and the share price is re-set at ~$25 per share to reflect the current value of the remaining Acres since the gas/oil content is not yet known
+ IOC finds more gas/ oil/ condensate and does it again and again
RE: takeover by total? Or just more talk? - cybersssss - 04-29-2015
John
I agree with your assessment. I do think that total's resource engineers probably have enough data now to give a good guesstimate as to the size of the resource. The well testing will give more information and shouldn't take that long.
IMo if they do make a play for ioc, it will be prior to the official resource estimate being released by the independent appraisers. If not by en, I doubt total will make any play for ioc.
RE: takeover by total? Or just more talk? - Spartina - 04-29-2015
Cyber, I was thinking the same thing. With all the experts Total has on their team and all the time they have had, all the data they must have reviewed by this time they must already have a VERY good idea of what is there (E/A). In order for GCA and even GLJ to remain credible I would think that they would have to er on the conservative side of the numbers of T's or their reputation can be tarnished.
RE: takeover by total? Or just more talk? - CAC - 04-30-2015
'Stavros' --1. TOTAL's payment for 40.1% of E/A is $2.74 Billion ($2.33 Billion remaining to be paid) 2. TOTAL will pay $100 Million per TCF is Antelope Deep (my understanding); let's say AD has 2 TCF, so value = $0.2 Billion 3. IOC's 36.5% of E/A has a value - - - how much? Well, since the Risk is lower than in December 2013, let's put it at $2.75 Billion Ergo, if I'm IOC, I'm willing to sell out fully to TOTAL for ($2.33 + $0.2 + $2.75) = $5.28 Billion for E/A (retain all other resources) That comes to roughly $110 per IOC share.
********
I would just add that, assuming the certification confirms that a plant will definitely be built, the pricing for IOC's remaining interest should be double or triple what TOT paid for the first chunk. The initial pricing was discounted heavily because at the time 1) IOC needed operating cash, and 2) there was no guarantee that enough gas would be found to build a plant (which is where the big money is made). Thus the need for more drilling.
From TOT's perspective, a plant means they can make several multiples on the amount they paid IOC for the initial gas. The initial pricing was modest because it necessarily took into account the possibility that TOT would have to do something else (something much less profitable) with their chunk. Once that possibility is eliminated, those initial prices should go out the window. It's not too hard to see Stavros' $110 per share figure being bumped to $150+...even without the other unproven assets.
RE: takeover by total? Or just more talk? - my2cows - 04-30-2015
'CAC' pid='57462' datel Wrote:
I would just add that, assuming the certification confirms that a plant will definitely be built, the pricing for IOC's remaining interest should be double or triple what TOT paid for the first chunk. The initial pricing was discounted heavily because at the time 1) IOC needed operating cash, and 2) there was no guarantee that enough gas would be found to build a plant (which is where the big money is made). Thus the need for more drilling.
Completely agree... Actually went back and forth with RJ analyst over this exact issue. His price is based on weighted average of Total deal, when in fact IOC should atleast be priced at the highest tranche if reserves are proved up above 7.1.
RE: takeover by total? Or just more talk? - Stavros - 04-30-2015
Good points CAC and my2cows.
I grudgingly will accept your counter-offer of $150 per share of my IOC stock that I never EVER loaned to anyone.
