IOC 3Q2012 Earnings CC Q&A
• Q&A
• Q1: Evan Calio, MS
• In opening comments, to be clear, you received official confirmation from O’Neill or NEC?
• A1: Personally from PM with me, Sir Rabbie and others. Got notice for kick-off mtg tomorrow re modification.
• Q2: Congrats, imp event. W/approval, what offering, 25-32.5% of 3.8 MTPA, how many Ts of gas offered?
• A2: Still with the state. Normally have to build up. Govt unit issues, mortality, no stable power, vaccines, crisis in i/s. Asked us to be pioneers, 22.5% in kind, key driver. Removes LNG capacity need for domestic consumption, if they want addit. Kick off 3.8 Tcf, sweet spots, all wanted phased in. Couple of integrated and NOC.
• Q3: If govt takes 22.5% in kind, IOC own 75%.
• A3: If people want to phase in whether sell to integrator, major, State.
• Q4: Why good for IOC s/h?
• A4: Get better deal w/phased in 3.8 Tcf, now project suited to mkt, easier to finance than starting w/7.6. Easier project to accel.
• Q5: Any comments re govt’s ability to buy?
• A5: It is premature. PM said get going. They still need to build own power plants for their gas. They have issues w/i/s, never had partner to work with them. We don’t have to build as much capacity, but PNG govt needs i/s, hospitals, no stable power, rampant throughout country. Govt excited.
• Q6: Can’t publish gas decline, assertions lower than GLG, big difference?
• A6: GLG 8.5 certified, more than enough for 8 MTPA capacity. Look at Exxon, built 19B project on shifting 3P to 2P. ANT-3 help.
• Q7: Sal A.
• Comments re PM permits going to NEC. Does this enable you to negotiate w/bidders or wait until permit actually issued? Ready to sign up someone.
• A7: Both, scopes to sweet spot, people now know what to bid on, push back on 7.6 Tcf, State kick off meeting tomorrow and next week. State takes gas in kind, # of key benefits, go forward.
• Q8: Govt said certain types of bidders, majors
• A8: All parties eligible. Original agreement to bring in established party, in active negotiations.
• Q9: If major, easier to finance, smaller co, more equity?
• A9: Parties we spoke to IOC, NOC, utility all talked about financing, talked to banks, significant capital, finally green lightt, active w/govt, bidders, wanted foundation project.
• Q10: You referred to modular approach, EWC, in mix?
• A10: Everything in mix, IOC could be traditional, bidders will decide.
• Q11: Supply of LNG growing, some surpluses, in negotiations price going down, up or same?
• A11: We see more w/costs of Australia, less available, less contract, declines Malaysia, Indonesia, physical depletion, Thailand, Malaysia, they have crisis, incremental new capacity barely deal w/lack of supply 2014-16. Don’t see shift of supply in Asia.
• Q12: W/all people owning stock, sweating value of stock. Please convey to PM and NEC, look forward to next couple of months.
• A12: Thanks.
• Q13: Pavel, RJ
• 4.8 Tcf, initial plan precisely that, min or max?
• A13: It is starting point, if someone wanted 4.2 could. Those are binary issues, it is a starting pt. Some bidders want 4.2, one 4.9, others 3.8, that covers everyone.
• Q14: What role CSP w/Mitsui?
• A14: A bidder may do themselves. Mitsui is in a consortium, they provided a financing option.
• Q15: Notice of approval verbally, want do you need?
• A15: Recommendation approved, kick-off tomorrow. Port Moresby meeting tomorrow.
• Q16: Colin you were quoted in PNGIndustryNews, 2 majors bid, can you confirm, elaborate?
• A16: Can confirm quote by myself. Have majors, NOCs, utilities. I have made that quote based on very detailed info we have, unlike others who don’t put their names to statements.
• Thank everyone for participating. Discussing absolutely RT issues.