Pet attempted to provide a status update on PDL and licenses in his post:
http://shareholdersunite.com/mybb/showth...p?tid=3568
I appreciate all effort to keep the record straight. I disagree with many of the assumptions in this post which are incorrect IMO and may fuel undue frustration in some investors.
Facts are friendly unless you are banned from SHU.
It is key to understand the specific Legal Nature of operating in O&G in PNG. PNG has the most advantaged framework for IOC to operate within that we could hope . We needn't to borrow trouble and IOC needs only to perform as they re mandated and license extensions and approvals will be earned.
My thoughts are as follow.
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If you search this document for “minister” you will find it mentioned 564 times. It frequently says “Minister may” or “Minister shall”. In other words almost everything is left up to the minister. As you know there are some changes currently being made in the PNG Government so maybe some of that will change.
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The 'Minister' serves at the will and pleasure of the PM of PNG. The Minister is obligated to operate within the confines of the O&G Act and all other subsequent agreements based upon the terms within. Nothing is 'left up to the minister' as if he has free reign. The Minister's last name is not Castro or Chavez and never will be in a Commonwealth Nation. The word 'May' is not a scary word in the legas context the Minister must operate within. 'May' is synonymous with 'Able'. As the developer meets their obligtions, the Minister may (is able) to meet his. An example is if IOC meets PDL requirements only then is Minister ABLE to grant PDL. More on tht later. The question is always 'Is IOC doing what it needs to satisfy their contractual obligations in PNG?' Answer - YES.
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If you look at page 23 you will see the license expiry date for all of the licenses.
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Expiry dates of licenses are most likely a non-issue. At issue - 'Is IOC doing what is needed of them to qualify for the Gov't to grant legas extensions?' Example - is IOC operating in good faith by investing in seismic, dril pad prep, road construction, etc. while in the midst of a transaction which will fatten the PNG Treasury for decades? Answer - YES.
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Regarding PRL 15 and our “potential” partners, the development work can not be started until we have a PDL (Production Development License), I expect the current ongoing discussions with the Government will probably include some type of assurances from the Government that a PDL will be granted. It may be that the PDL will be granted on or before the date the sell down is announced.
On the other hand the Government may not be in any hurry to grant a PDL because after granting the PDL the Government owes IOC for their 22.5% share of the sunk costs for the development of the Elk/Antelope Fields. |
A PRL is almost as wide ranging as a PDL in PNG. In fact, there is PNG precedent for the sale of Oil while under only a PRL in Moran.
"...As noted, the legislation gives sufficient scope and rights, in exclusivity, to the holder of an exploration licence to explore 
for 
, produce and sell or dispose of petroleum produced within the exploration acreage. The scope of a PPL is therefore as wide as a PDL . The case on point is the Moran Petroleum Project.[51] In September 1996, oil was discovered in Moran IX sidetrack well in PDL 2.[52] In early 1997, the State approved the PDL "...
LNG pre-investment hasn't been hampered by the lack of a PDL nor should it and it is ongoing. No bidders need assurnces of a PDL being granted and a lck of a PDL will not hamper a transaction in any manner. By definition of acquiring a PDL, the Gov't the Minister 'may' not legally issue a PDL currently More on that later. So there is no possibility of the Gov't avoiding sunk costs by not hurrying to grant a PDL. This is not a chick/egg situation.
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Regarding the JVOA’s I am not too sure what they mean. We have a partner in PPL 237, that being PRE, and we also had Carlo Civelli’s Company (Pac LNG) added to PRL 15 for a 2.5% interest. So the JVOA’s could just be to cover existing partners. The new partner(s) may be covered by these JVOA’s but more likely they will negotiate new agreements with both IOC and the Government. That and the PDL may be part of what is holding up the sell down announcement.
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My thoughts on statutory approval of JVOA's have evolved. My bet is the 'Gas Agrement' with PNG has been reached and now PNG and landowners have been added to the PRL 15 JVOA with existing partners IOC, PAC LNG, IPI Investors. The Gov't cannot be named on JVOA without Gas Agreement and almost surely they are now listed on the tenements. Who else could be at this time? That clears the way for a bidder chosen and named on the JVOA. Major obstabcle crossed. Fuel for the bidding war which is real.
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“The application for a PDL is made to the DPE and must be accompanied by detailed proposals for the financing, construction, establishment and operation of all facilities and services for and incidental to the recovery, processing, storage and transportation of gas from the PDL area. Collectively these will constitute the Development Plan. In addition, certain agreements and approvals from the State will need to be in place prior to the grant of the PDL including a gas agreement defining the fiscal regime applicable to the development and providing for the State’s equity participation in the fields. Environmental approvals will be necessary and we will also be obliged to submit comprehensive social mapping and landowner identifications studies of those customary landowners within the PDL area. Ministerial recognition of landowner groups is customarily based on such reports."
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Nothing at all scary or gray with this section of O&G Act. I do not understand why it is highlighted. The question should be - "Is IOC performing the requirements to earn a PDL?" Answer -YES. A PDL cannot be earned until post transaction with a FID ready project as the names and details required for PDL also apply to prudent commercial requirements to reach FID. It should be obvious to all that it is only known contractual obligations unyet known preventing IOC from a PDL.
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Once all formalities are completed and the State is satisfied, the State may (will be legally able to) grant the PDL, the PPFL and the PLs. Should the licenses be issued, the acreage would be held subject to; (i) periodic review provided for in PNG’s Oil & Gas Act, and (ii) the license holders continuing to meet commitments associated with the license grant.” |
Again, 'May' = 'Able'. Should = Developer and State both performed their obligations which leads to approvals
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As far as I know the Government has not yet approved the extension of the licenses or the moving of the drilling commitments for PPL 236 and PPL 238 from year four to year five. They did approve the extension of the drilling commitment for PRL 15 which covers Elk 3.
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Key here is recent history. Gov't is working with extensions as IOC is working within the PRL's and PPL's in good faith. If IOC was doing nothing, the licenses would be removed and sold to a developer that would explore and commercialize. Nothing to worry about here either IMO.
Bottom line is as IOC continues to perform, there is nothing to fear regarding Minister or Gov't doing their mandated jobs