IPI cannot wag this deal

[jft310]

Carlo better hurry or he goes to zero,
Can Duma do that well yes he can just remove all
The mi names from the new licenses.
Ya see Duma is 110 percent behind
Total .
So much for the shorts nonsense about 12
Million share dilution.

[Palm]

Going to zero won't happen either. A fair price will be settled upon when all the dust settles. IPI will get what they get and if they feel it isn't fair, they always have attorneys who will be glad to go through a court battle. That's what attorneys do.

[jft310]

Zero means off licenses.That diminishes
the value. Contract states $25 million per point
of interest .see section 9.1 and 9.2 .Thats 25 percent times $25 million or $625 million when they act as a group which they are doing.

[Relker]

It should be clear that IPI only has an indirect participation. This means that IOC is able to sell a part of the unburdened participaton to Total without the consent of IPI. When the the production joint venture start producing, they can start consuming with the unburdened participations. This will bring IOC in a better negotiation position.

[Stavros]

I heard that PNG government interprets the Oil and Gas Act to say that an indirect participation is not allowed in a project and therefore they will remove IPI and Pacific LNG if they refuse to make a deal themselves. If this is true then maybe JFT is correct that IPI could go to zero.

[jft310]

Stavros-Their interest on the new licenses it appears will go to zero. I believe its an IOC issue not a project issue. IMHO worst case IOC carries the minority interest as a footnote on their financials. A footnote is worth substantially less than your name on a lease and a right to build an LNG plant. Way less a prudent man would conclude. Civelli did not become rich being a stupid man. He must realize that he has no negotiating position anymore. Meanwhile that contract that kept Hession from agreeing to Civelli's dollar demands also has some protection for Civelli and the other minority interest. Pavel M has recently estimated the total payment to the minority for all their interest is $750 million.
At that rate IOC if they have what GLJ states and I think they will have more well IOC makes a nice profit on the buyout. Remember the minority interest is 25% I conclude that IOC will receive $4.1 Billion at least at certification I believe.
Here's the scenario. Buy out the minority for $750 mill and resell it to Total for a $1 Billion at least. Retain 30% and the LNG plant interest of 30%. That makes the profit on the IOC buyout a net positive for IOC on the buyout to the tune of $800 mill to $1 Billion. Part of that dollar receipt assumes a resale on the minority interest outside PRL 15 to a Woodside type..See the AFR articles about a Woodside interest and they are talking to Interoil not Total about that interest.
For sure the minority will be gone. The price has not been announced but Pavel M has a good feel for the situation it appears.
When ??

[ebster123]

All sounds good JFT, Tree I appreciate your 2/14 post. I was not aware of the position of weakness the IPIs have with the negotiations. If this is the case good fortune to IOC.

[Relker]

I wonder how people arrive at the value of US $ 750 M. I did as well but was not convinced of my maths.

Assumptions:
1. IPI share after deduction state and landowner part: 17%
2. Price per 1% if IOC opts to reduce: US $ 50 M
3. Estimated sunk cost of drilling: US $ 600 M

Calculation
Buy out license: 17*50= 850
Costsharing sunk cost 17*600 -102
----
748

It can be argued that IOC not really opts to reduce the interest. In the case of Tricerops IOC was able to sell 10% to a Columbian company. So, IOC could choose to buy out Civelli in 2030 when they really need the gas because the field is almost depleted.

[jft310]

Relker-Per 9.2 of the agreement states if the minority work together as a group as they certainly are ,then the dollars are $25

million per point.

There is no way the minority interest can afford to buy into the LNG plant . Cash call issued and they have 20 days to wire in the

money or they are in default. They don't have the cash.

Duma is removing the right of the minority to any proceeds from the projects . They are losing their ownership. No name on the

title. Talk about a friendly Duma!!