Upfront Cash vs. LNG train stakes

[Tree]

That is the sliding scale.  I want both, but can only get 1.

More upfront cash = less % ownership in train stakes.

If IOC is to survive LT, management/PAC LNG should seek highest % ownership in LNG trains.

When we get a SPA deal, and if IOC is ultimately sold, then I think most surely XOM will be ultimate buyer.

Higher the cash upfront the higher probability IOC/PAC LNG is headed to a sell out.

Higher LNG train stakes % ownership the higher probabiity IOC survives.

What would upfront cash of a few billion imply??

XOM stock coming our way?  $10 billion in stock would be non-dillutive to XOM stock and wouldn't even garner a reuters article.

[jft310]

I agree with Tree less cash is good and LNG train participation is the best IOC solution. I see where OSH and TOT teamed up to bid on E/A per Blair Price. Logic says they will bid again after the Exxon SPA and when their CA is released. Further appears Exxon really needs the IOC NG and expect a bid to counter OSH and TOT. May the biggest/deepest pocket win! My real vote is for IOC to survive.

[ArtM72]

Tree - don't you think the more likely outcome would be Total SA picking up IOC assets in 237 and 238 then building the Gulf LNG? If the fish fields in 236 turn out to be reefs with gas then XOM can buy what it needs almost on its doorstep, leaving 237 and 238 discoveries to the Gulf and its political/economic aspirations. Win Win Win. Lots of ifs there I know, but that scenario could prove out in the next couple of years if somebody landed another drilling rig or two.

[Tree]

Tree - don't you think the more likely outcome would be Total SA picking up IOC assets in 237 and 238 then building the Gulf LNG? If the fish fields in 236 turn out to be reefs with gas then XOM can buy what it needs almost on its doorstep, leaving 237 and 238 discoveries to the Gulf and its political/economic aspirations. Win Win Win. Lots of ifs there I know, but that scenario could prove out in the next couple of years if somebody landed another drilling rig or two.

Hey Art, I think all outcomes are likely.  My preference is big LNG stake in PNG LNG, feed 2 trains, drill more and build/own big chunk of Gulf LNG and fully develop PPL 236 to feed another plant we own chunk of at napnap.  I think this is unlikely as that small handfull of XOM Engineers camping in IOC's data room aren't only looking at E/A core samples.

[admin]

Yea, an LNG stake would ease the only relative worry I had after it became known that Exxon is becoming IOC's partner, turning into a feeder company for the Exxon plant. While that is profitable, and there are solid incentives for that (way cheaper to add trains to Exxon plant than to build a new one from scratch), I was also hoping IOC becomes an LNG seller ourselves.

[jft310]

Puzzle pieces-Phil is talking in Oct at an FLNG conference. Both EWC and FLEX are FID ready. Exxon seems to like FLNG these days. Will IOC get to use those offtake deals that Conrad Kerr cut???

[ArtM72]

Let's just take a step back and appreciate for a minute Henry's dream for mid size modular LNG facilities. Does anyone really think this is not a solution to bringing large quantities of stranded gas around the world to the market and the majors and NOCs are ignoring this technology?

Look at the steel industry for a direct analogy. Until the 1970s the big integrated mill is where steel was produced. Then a little company called Nucor developed the steel "mini-mill" using scrap steel and electric hearth furnaces. Now NUE is just about if not the largest steel producer in the US with mini-mills all around the country, and it has a lot of competition. The big integrated mills meanwhile have been going the way of the dinosauers.

Henry had it right and don't think for a minute there aren't a lot of people following down the EWC path.