'TxPm' pid='10968' datel Wrote:Thanks Palm. The govt's portion of the sunk costs alone should be close to $100Mil which will be another nice boost to IOC's cash reserves. I'm willing to bet that the govt is attempting to negotiate with one of the SM's a piece of their 22.5% so that they (the govt) don't have to foot any sunk costs or other fees/payments
Tx, we have to remember that the gov't standard method of paying for their sunk cost requirements is on the back end out of their portion of production; so we don't realize it until then. For a while were getting some money from them, but that has now stopped (since 2010 I think). This protects them from investing State funds into a project that never produces. Then, as new costs are incurred to develop the project after production, the State's royalties are reduced until their portion is paid for. That's one reason that the cash flow projections are important; the timing of when we get the State's piece. Collin has stated that once the project is approved and we get to FID IOC can borrow against the State "receivable" if necesary, but the ideal would be to not have to do that. We're already carrying that and once we can monetize we will have reserves we can leverage, plus any cash from PRE and SD partners. We are close.