'Curiously" Announced JVOA Approval

[Tree]

Well, that omniscient industry source  strikes again.  Anyone have a spear for Phil to take to the bargaining table?

JVOA approvals: InterOil

Blair Price Wednesday, 17 April 2013 WITH anticipation building over the prospect it could land a deal with a supermajor, InterOil curiously announced Papua New Guinea government approval for joint venture operating agreements (JVOA) for two of its licences. Image courtesy of InterOil. According to the announcement, Petroleum and Energy Minister William Duma approved JVOAs for InterOil’s Elk-Antelope field-hosting petroleum retention licence 15 and for the Triceratops field-related Petroleum Prospecting Licence 237.  The companies in the JVOAs were not mentioned but InterOil did provide some context on the interest in PRL 15.  “As previously disclosed, InterOil has received bids from potential partners in connection with the development of the Gulf LNG project and an interest in the Elk and Antelope fields in Papua New Guinea,” InterOil said.  “Confidential negotiations with more than one bidder are ongoing, and the process is moving forward as planned. InterOil will provide further comment once these discussions have closed and an agreement has been reached.” In response to some clarifications sought by PNGIndustryNews.net, InterOil chief financial officer Collin Visaggio said the JVOAs were new and “did not exist before”.  He confirmed that one of the JVOAs related to the previously announced JV with Colombian oil producer Pacific Rubiales Energy.  The CFO did not reveal much on the JVOA for PRL15.  “The JVOA for PRL15 will govern the joint venture arrangements with the existing partners and anyone else that is registered on the licence,” he said.  However, an industry source told PNGIndustryNews.net he was uncertain if InterOil was pre-empting a deal to come, but he believed the JVOAs were covering existing partnerships in those licences. “If a major partner is going to come in, they may not even like the JVOA, in which case I presume they will modify it and get it approved again,” he said.

Could it be a  safer bet to side with Collin's view of this?  

Again.

[jft310]

One could conclude from this that IOC will be the majority partner maybe. Or maybe the PNG govt is taking the lead. or....

[Tree]

The PRE Tri and 237 JVOA was executed (Corporately approved between the partners) last Nov., now the State has approved it. Makes a take-over more costly now as PRE would need to be dealt with.

..."Collin Visaggio said the JVOAs were new and “did not exist before”.

The PRL 15 partner selection announcement looooooooooooooms.

**********

InterOil Executes Joint Venture Operating Agreement With Pacific Rubiales Energy For Triceratops and PPL 237

November 29, 2012

Port Moresby and Houston, TX — InterOil Corporation (NYSE: IOC) (POMSoX: IOC) (“InterOil” or the “Company”) announced that negotiations have been completed and the parties have executed the Joint Venture Operating Agreement (JVOA) and related documents associated with its Farm-In Agreement with Pacific Rubiales Energy Corp. (TSXRE; BVC: PREC; BOVESPA: PREB) (“PRE”), pursuant to which PRE will acquire a 10.0% net (12.9% gross) participating interest in Petroleum Prospecting License 237 (“PPL 237”) onshore Papua New Guinea, including the Triceratops structure and exploration acreage located within that license. This announcement is made further to the Company’s announcement on July 30, 2012 that it had executed a Farm-In Agreement with PRE.

Signing of the JVOA and related documentation accomplishes one of the key milestones to final completion of the Farm-In transaction, which remains subject to previously announced closing conditions and approvals.

[jft310]

I ask the simple question a Joint Venture Agreement between which parties. ???Who signed the agreement??

[ArtM72]

I wonder if, given the way Duma has operated in the past, the finalists didn't say "no final number until we see an approved JVOA from the government". That would make a ton of sense for everyone involved, and certainly explain the extended time frame of the bid evaluation/negotiation.

The approval of the PPL 237 JVOA and apparent PRE drilling campaign coincides well with the potential use of PPL237 gas for feedstock to both Port Moresby and Kerema locations. Recall the proposed ultimate CSP capacity was something just short of 16 mtpa. I don't know how far you can pump raw gas without drying it. Could it go all the way from Triceratops to E/A? Probably not, but I suppose there are lots of ways to skin that cat. Duckbill/Raptor? Time will tell.

[Palm]

I think that this JVOA is part of IOC's historical way of progressing development in anticipation of the project approval. They have continuously spent money on development of things that will be necessary no matter who the partner is and no matter where the LNG plant(s) will be located. All of the road building, bridges, clearing of pipeline ROW, readying Napa Napa, building the Hou landing area and Purari landing area, building the base camps, etc etc along with the drilling of prospects will allow them and whoever partners with them to hit the ground running. However, the government wants to be sure any spending is necessary and done timely (ie spudding Elk-3), and so I see these JVOAs as approval of how works can progress now and after the partner(s) is/are chosen and approved. The fact that these JVOAs were registered under the O&G Act says to me that IOC, Pac LNG, PRE and the government are on the same page and IOC has the parameters under which it can continue to spud, do seismics, etc. and the government has given its approvals. I would expect that we see Elk-3 spud any day. When any partner(s) are chosen these JVOAs are already in place as to essential development for the LNG project; basically no-brainer stuff that the government has already approved.

This shows how proactive IOC is and why things will move very quickly once the partner(s) are chosen. Very positive in that the government has signed off.

Pet's find of the Raptor/Duckbill notation in PREs presentation also points to this. I think they have convinced the government that it's very likely the reef (string of pearls) runs southward right through IOC's licenses. If you look at some of the slides from last year which showed gravity data ("Potential Field Data Aids Prospect Definition on slide 13 here:
http://www.interoil.com/iocfiles/documen...202012.pdf ), Raptor/Duck Bill is described as, "The Raptor Duck Bill trend is well defined on gravity. This will aid in planning for additional future seismic over this highly prospective area." If PRE is saying they plan on drilling here, it must be that the government is saying, "Go for it" under the approved JVOA.

[Tree]

I wonder if, given the way Duma has operated in the past, the finalists didn't say "no final number until we see an approved JVOA from the government". That would make a ton of sense for everyone involved, and certainly explain the extended time frame of the bid evaluation/negotiation. The approval of the PPL 237 JVOA and apparent PRE drilling campaign coincides well with the potential use of PPL237 gas for feedstock to both Port Moresby and Kerema locations. Recall the proposed ultimate CSP capacity was something just short of 16 mtpa. I don't know how far you can pump raw gas without drying it. Could it go all the way from Triceratops to E/A? Probably not, but I suppose there are lots of ways to skin that cat. Duckbill/Raptor? Time will tell.

*********

The headline and topic line of the JVOA PR on Monday kinda tell the story.  Don't you love it when a plan comes together?

"INTEROIL RECEIVES STATUTORY APPROVALS

     Partner Selection Process Moving Forward as Planned"

[Palm]

What we also likely could be seeing is the beginning of the DPE fulfiling its "statutory" role going forward.  This is part of the reorganization going on in PNG with the SOEs and DPE; the DPE will be a "statutory" agency; meaning it will primarily be a box-checking agency and the NEC and Kumul Petroleum will be overseers.  In this context it's quite possible that we are seeing (for PRL 15) the progression of the PDL application.  We've heard before that tings are done in stages (social mapping, LO identification) and we also know that recently some of this has been completed (both social mapping and LO identification).  Another important part of the PDL application is this:
"© shall be accompanied by detailed proposals by the applicant for the construction, establishment and operation of all facilities and services for and incidental to the recovery, processing, storage and transportation of petroleum from the licence area;"

Having this agreed to for the PDL ahead of time would be a big plus for any partners coming in.  This is the type of thing that is required under the O&G Act and would be a statutory check-off for the DPE.  When you review the requirements for applying for a PDL, IOC has some of the most tedious already done.  The JVOA for PRL 15 could be another one..

[Tree]

Palmao,
Appears there is an invisible hand in png gvt moving things along. We may have awoken a sleeping giant baby.