A7

[ArtM72]

Pet -

Would you mind addressing my concern that soon we will have triangulated pressure tests in a very permeable formation and knowlege of the actual boundaries of that formation (eg specific fault locations) are of much lesser if not little consequence? Just how can pressure tests be of any value when adding a seventh well to a formation can resolve a 30% pressure testing error?

Thx as always.

[ArtM72]

We do not know that the "base project" would be delayed by a year, and I do not think it would.  I think an additional billion dollars cash in less than a year would be hugely positive for IOC and its future and its stock.  I think there are significant questions left about the fault that could affect the certification, and would be interested in Pet's comments on your comments about the need for A7.  I'll go with the judgment of IOC's experts on all this.

The PRL 15 discovery well has been specifically and consistently identified as Antelope South by management, and I have heard no one else suggest it should be anything else.

An incremental billion dollar check will matter to IOC's stock price but I bet not nearly so much as when the FIRST billion  is received.

[Getitrt2]

We do not know that the "base project" would be delayed by a year, and I do not think it would.  I think an additional billion dollars cash in less than a year would be hugely positive for IOC and its future and its stock.  I think there are significant questions left about the fault that could affect the certification, and would be interested in Pet's comments on your comments about the need for A7.  I'll go with the judgment of IOC's experts on all this.

The PRL 15 discovery well has been specifically and consistently identified as Antelope South by management, and I have heard no one else suggest it should be anything else.

An incremental billion dollar check will matter to IOC's stock price but I bet not nearly so much as when the FIRST billion  is received.

Getting the stock price significantly higher in the next year with a billion more is more important than a gain to a not as high price sooner, unless you are just looking for a lesser exit point sooner.  Furthermore, an additional $1 billion in the coming year puts the Company in a fundamentally stronger position to take advantage of opportunities for years to come and should add permanently to the stock price.  As Raymond James stated, "As always, it is more important for this process to be done right, rather than done quickly".  I also say, "Get it right", as long as the benefit exceeds any detrimental effect, and I think that is what this management is trying to do.

[ArtM72]

We do not know that the "base project" would be delayed by a year, and I do not think it would.  I think an additional billion dollars cash in less than a year would be hugely positive for IOC and its future and its stock.  I think there are significant questions left about the fault that could affect the certification, and would be interested in Pet's comments on your comments about the need for A7.  I'll go with the judgment of IOC's experts on all this.

The PRL 15 discovery well has been specifically and consistently identified as Antelope South by management, and I have heard no one else suggest it should be anything else.

An incremental billion dollar check will matter to IOC's stock price but I bet not nearly so much as when the FIRST billion  is received.

Getting the stock price significantly higher in the next year with a billion more is more important than a gain to a not as high price sooner, unless you are just looking for a lesser exit point sooner.  Furthermore, an additional $1 billion in the coming year puts the Company in a fundamentally stronger position to take advantage of opportunities for years to come and should add permanently to the stock price.  As Raymond James stated, "As always, it is more important for this process to be done right, rather than done quickly".  I also say, "Get it right", as long as the benefit exceeds any detrimental effect, and I think that is what this management is trying to do.

We'll agree to disagree, but I can't get my head around your argument unless you and Hession currently believe that without the extra 1-3 Ts IOC will have little if any resource payment coming after certification.  Let's get cash rich first and then see what A7 brings.

Again, as posed to Pet, just how can six wells and triangulated flow testing result in a 30% volume error that somehow a 7th well will correct?  Makes no sense to me.

[Putncalls]

Hessian's A7 decision is good for Hessian and bad for shareholders. It's a classic example of management versus the common shareholder. Hessian keeps his cushy job because Total's cash can't be used as leverage in a buyout until it's in the bank.

[Getitrt2]

We do not know that the "base project" would be delayed by a year, and I do not think it would.  I think an additional billion dollars cash in less than a year would be hugely positive for IOC and its future and its stock.  I think there are significant questions left about the fault that could affect the certification, and would be interested in Pet's comments on your comments about the need for A7.  I'll go with the judgment of IOC's experts on all this.

The PRL 15 discovery well has been specifically and consistently identified as Antelope South by management, and I have heard no one else suggest it should be anything else.

An incremental billion dollar check will matter to IOC's stock price but I bet not nearly so much as when the FIRST billion  is received.

Getting the stock price significantly higher in the next year with a billion more is more important than a gain to a not as high price sooner, unless you are just looking for a lesser exit point sooner.  Furthermore, an additional $1 billion in the coming year puts the Company in a fundamentally stronger position to take advantage of opportunities for years to come and should add permanently to the stock price.  As Raymond James stated, "As always, it is more important for this process to be done right, rather than done quickly".  I also say, "Get it right", as long as the benefit exceeds any detrimental effect, and I think that is what this management is trying to do.

We'll agree to disagree, but I can't get my head around your argument unless you and Hession currently believe that without the extra 1-3 Ts IOC will have little if any resource payment coming after certification.  Let's get cash rich first and then see what A7 brings.

Again, as posed to Pet, just how can six wells and triangulated flow testing result in a 30% volume error that somehow a 7th well will correct?  Makes no sense to me.

I don't mind agreeing to disagree, but I don't understand what your "head" problem is.  What if instead of $1.3 billion, the base amount on the "Strategy" presentation including FID payment and just enough to fund Papua LNG, IOC got $2.5 billion maybe four to six months later, or instead of $2.2 billion or $3 billion, got $3.4 billion or $4.2 billion, not even considering the potentially greater NPV of its share of a larger Papua LNG project?  You don't think that would have a much bigger positive effect on the stock, with a ridiculously low current market cap of $1.825 billion for all its assets debt free?

If they do certification and payment after Ant 6, and then drill and test Ant 7, there would not be a second certification and additional payment then, barring a major contract modification, but only a final certification after start of production years from now.  Talk about a discounted NPV effect!

On the technical drilling and testing aspects of the decision, you'll have to consult Pet or someone.  Apparently, management now thinks it could make a big difference, but I would say that if after further analysis they conclude otherwise, they will decide against Ant 7 and proceed with certification without it.  You seem to doubt their competence to make that decision properly.     Other than that, I hopefully have added enough clarification to move on.

[Getitrt2]

Hessian's A7 decision is good for Hessian and bad for shareholders. It's a classic example of management versus the common shareholder. Hessian keeps his cushy job because Total's cash can't be used as leverage in a buyout until it's in the bank.

IMO, that makes no sense and is just totally wrong.  The decision on A7 will be made by management and the BOD in compliance with their fiduciary duty to the Company and its shareholders.  If you really believe what you said above, you should sell your damn stock and move on.

[jft310]

Let's keep it real Hession can't decide anything . Interoil BOD has a 36 percent voting interest in whether 7 gets drilled or not . That's not a majority and by ourselves we can't do anything . If they as a group vote for Ant 7 it's because it helps with the basis of design etc etc . But I agree when is enough ???

[Putncalls]

The A7 decision hurts shareholders. Period. It helps Hessian, his club and Total. Total gets to delay CAPEX, Hessian and club keep their jobs. The shareholders only relief from this energy market was Total's payment and now they get screwed. We didn't need A6 or A7 to prove enough gas for two trains. Gettit is so dogmatic and his response so primitive he might as well join the IS.

[ArtM72]

We do not know that the "base project" would be delayed by a year, and I do not think it would.  I think an additional billion dollars cash in less than a year would be hugely positive for IOC and its future and its stock.  I think there are significant questions left about the fault that could affect the certification, and would be interested in Pet's comments on your comments about the need for A7.  I'll go with the judgment of IOC's experts on all this.

The PRL 15 discovery well has been specifically and consistently identified as Antelope South by management, and I have heard no one else suggest it should be anything else.

An incremental billion dollar check will matter to IOC's stock price but I bet not nearly so much as when the FIRST billion  is received.

Getting the stock price significantly higher in the next year with a billion more is more important than a gain to a not as high price sooner, unless you are just looking for a lesser exit point sooner.  Furthermore, an additional $1 billion in the coming year puts the Company in a fundamentally stronger position to take advantage of opportunities for years to come and should add permanently to the stock price.  As Raymond James stated, "As always, it is more important for this process to be done right, rather than done quickly".  I also say, "Get it right", as long as the benefit exceeds any detrimental effect, and I think that is what this management is trying to do.

We'll agree to disagree, but I can't get my head around your argument unless you and Hession currently believe that without the extra 1-3 Ts IOC will have little if any resource payment coming after certification.  Let's get cash rich first and then see what A7 brings.

Again, as posed to Pet, just how can six wells and triangulated flow testing result in a 30% volume error that somehow a 7th well will correct?  Makes no sense to me.

I don't mind agreeing to disagree, but I don't understand what your "head" problem is.  What if instead of $1.3 billion, the base amount on the "Strategy" presentation including FID payment and just enough to fund Papua LNG, IOC got $2.5 billion maybe four to six months later, or instead of $2.2 billion or $3 billion, got $3.4 billion or $4.2 billion, not even considering the potentially greater NPV of its share of a larger Papua LNG project?  You don't think that would have a much bigger positive effect on the stock, with a ridiculously low current market cap of $1.825 billion for all its assets debt free?

If they do certification and payment after Ant 6, and then drill and test Ant 7, there would not be a second certification and additional payment then, barring a major contract modification, but only a final certification after start of production years from now.  Talk about a discounted NPV effect!

On the technical drilling and testing aspects of the decision, you'll have to consult Pet or someone.  Apparently, management now thinks it could make a big difference, but I would say that if after further analysis they conclude otherwise, they will decide against Ant 7 and proceed with certification without it.  You seem to doubt their competence to make that decision properly.     Other than that, I hopefully have added enough clarification to move on.

Assuming A6 drilling is not the disaster seen in the past few wells the only way that A7 would delay the project only 4-6 months is IF in the next 3-5 months a site is selected, prepared to receive the heli-rig and rig readied for spudding.  That appears a very tall order.  Is it even possible that Kirk could oversee the drilling and testing of three 90 day wells in a row?  Past history certainly doesn't suggest a high likelihood of that happening.

BTW, doubting the competence of Hession and his minions to make the decision properly isn't at play here.  The calendar speaks to their apparent competence.  I doubt their motivations.