NO Counter Bid from Total

[Relker]

Suppose we say no to XOM they will remain interested in E/A and the leases of IOC. The P'Nyang field is a failure till now and the development cost are very high in the mountains. XOM wants to build train 3 and needs the feedstock from IOC. So, I am sure we can wait with the deal till after certification or even FID. It is a good sign that Total is so determined to build Papua LNG. May be they prefer XOM. However, they decided to team up with IOC in 2014.

[Libtardius Maximus]

"Our main objective was to unblock the project by removing InterOil and now we have Exxon as a partner with the financing power and understanding of LNG." Exxon's takeover of InterOil, which has yet to be approved by shareholders in the US-listed target, will mean that the PRL15 permit holding InterOil's Elk-Antelope field will be split between Exxon, Total and Oil Search, with Total the venture operator.

It's right there in front of your eyes. Total never intended to have IOC as a partner in the project. They didn't complain when OSH bought out IPI and held things up for a year. Between OSH, TOT and XOM the goal was to remove IOC as cheaply as possible including a low certification number from OSH-IPI. All gamed out. Hession et al walk away with millions as shareholders get screwed.

[Putncalls]

Total may think that it will owe little post A7.

[ArtM72]

Suppose we say no to XOM they will remain interested in E/A and the leases of IOC. The P'Nyang field is a failure till now and the development cost are very high in the mountains. XOM wants to build train 3 and needs the feedstock from IOC. So, I am sure we can wait with the deal till after certification or even FID. It is a good sign that Total is so determined to build Papua LNG. May be they prefer XOM. However, they decided to team up with IOC in 2014.

Great theory and explanation Reiker. Exxon needs gas and Interoil has it. I love simplicity.

On the other side of the wizzard's curtain is it possible Hession actively avoided making deals for less than 'change of control'?   Why isn't Raptor being sold to Exxon? Need a second well?  Make a deal.

[Relker]

Suppose we say no to XOM they will remain interested in E/A and the leases of IOC. The P'Nyang field is a failure till now and the development cost are very high in the mountains. XOM wants to build train 3 and needs the feedstock from IOC. So, I am sure we can wait with the deal till after certification or even FID. It is a good sign that Total is so determined to build Papua LNG. May be they prefer XOM. However, they decided to team up with IOC in 2014.

Great theory and explanation Reiker. Exxon needs gas and Interoil has it. I love simplicity.

On the other side of the wizzard's curtain is it possible Hession actively avoided making deals for less than 'change of control'?   Why isn't Raptor being sold to Exxon? Need a second well?  Make a deal.

Hides deep and P'Nyang turned out to be a deception recently. Ever since IOC came for sale, this looked to be the best option for OSH and XOM. I wonder whether MH explored other options with OSH and XOM. The OSH deal was too complicated for the large shareholders, therefore XOM came in. Total never takes large stakes in new projects so why would they buy IOC. However, OSH was the only serious buyer at first. Therefore Total was willing to do business with OSH. They would acquire the OSH stake at a huge bargain. So, I can imagine their chagrin now.

If IOC rejects the deal the following can happen:

1. IOC can not beef up the equity investment after FID. This might happen if the license payment is too low. They can choose for a phased project development. For instance phase 1: Deliver gas to train 3 PNG LNG; phase 2: Train 1 Papua LNG phase 3: :Train 2 Papua LNG
2. IOC can negotiate a deal with XOM and OSH regarding Raptor. By doing this they can get extra income for the equity investment mentioned under 1.

[jft310]

Relker there are lots of scenarios where IOC could have survived . Some used only cash on hand and Total receipts as available cash when nothing was further from the truth . If the markets saw progress a large equity raise would have worked . Credit Suisse did the work and they stated Interoil would need to raise $1.2 Billiln not all at once to bridge into first gas . That could have happened . Other oil companies smaller ones have been raising cash , The problem was Hession and his greed in getting something announced by mid July this year for an extra bonus . It's simple he wanted to cash out .
Why did Byker ever offer that bonus to sell the company ??

[Palm]

Fact: when Byker retired from Calvin part of the reason was to focus more on IOC. That was in 2012 and he stated that deals were in the works and they needed to come to fruition. Plus "shareholders were upset" that pps was in the terlet. By fall pps was ... under $50 under PM's mgmt. We all know projects were promised and weren't happening and PNG gov was not happy. Then IBs were to receive bids and decide what was best. Big things promised, deals were called "certain" here. Any day, by end of March. Then April. Then Phil "retired". What would you have done given the circumstances where there was little cash left, no confidence in IOC getting a deal done and by fall we were seriously close to losing licenses.

None of us would have wanted to be on the Board at that time.

[ArtM72]

If IOC rejects the deal the following can happen:

1. IOC can not beef up the equity investment after FID. This might happen if the license payment is too low. They can choose for a phased project development. For instance phase 1: Deliver gas to train 3 PNG LNG; phase 2: Train 1 Papua LNG phase 3: :Train 2 Papua LNG
2. IOC can negotiate a deal with XOM and OSH regarding Raptor. By doing this they can get extra income for the equity investment mentioned under 1.

You forgot to mention the most obvious:

3. IOC sells off part of its holdings for bridge financing.

[ArtM72]

Fact: when Byker retired from Calvin part of the reason was to focus more on IOC. That was in 2012 and he stated that deals were in the works and they needed to come to fruition. Plus "shareholders were upset" that pps was in the terlet. By fall pps was ... under $50 under PM's mgmt. We all know projects were promised and weren't happening and PNG gov was not happy. Then IBs were to receive bids and decide what was best. Big things promised, deals were called "certain" here. Any day, by end of March. Then April. Then Phil "retired". What would you have done given the circumstances where there was little cash left, no confidence in IOC getting a deal done and by fall we were seriously close to losing licenses. None of us would have wanted to be on the Board at that time.

Intersting.  I recall Calvin College endowment was in a world of hurt with its big IOC position.  That would speak to intent with Byker giving Hession a big incentive to sell the company.  Sale of IOC would give the endowment a big boost from which they could diversify. Byker probably didn't imagine Hession would spend a $billion and sell the company out from under all its shareholders (including Calvin) in a 50% off clearance.

[oliver.gump]

If IOC rejects the deal the following can happen:

1. IOC can not beef up the equity investment after FID. This might happen if the license payment is too low. They can choose for a phased project development. For instance phase 1: Deliver gas to train 3 PNG LNG; phase 2: Train 1 Papua LNG phase 3: :Train 2 Papua LNG
2. IOC can negotiate a deal with XOM and OSH regarding Raptor. By doing this they can get extra income for the equity investment mentioned under 1.

You forgot to mention the most obvious:

3. IOC sells off part of its holdings for bridge financing.

Correct! IOC can survive (sans teflon mike and his flying circus), some changes will be needed to the company, however this does not have to be the curtain call for IOC.

However, if the pink cancer is allowed to remain, then IOC's survival is impossible.