Oil Search reported earnings this evening. Here's their presentation - http://www.oilsearch.com/Media/docs/130820%202013%20Interim%20Results%20Final-1b1b9f4c-3293-4700-9708-f55fdf780d59-0.pdf
See page 27 on P'nyang - the company writes, "Development work expected to continue through 2013 and into 2014, to support submission of production development licence application in 2015”
In other words, P’nyang is still speculative and a long way from development. It’s evident from this presentation that Exxon needs InterOil’s gas to attain certainty in underpinning train 3 at PNG LNG in 2016.
In fact, on page 28 of Oil Search’s presentation, the company states that:
- InterOil (IOC) and Pacific LNG Group in exclusive negotiations with ExxonMobil on development of PRL 15, containing Elk and Antelope gas fields
- Publicly stated that discussions are focused on developing an additional LNG train at PNG LNG Project site
- If transaction proceeds, OSH could potentially participate, either through use of PNG LNG infrastructure or integration into PNG LNG
Very interestingly, in the comparable slide on OSH’s last presentation, it wrote “Any agreement is subject to Government approval”. This statement was left out of the current presentation, which makes one wonder how positive the political developments referred to in today’s IOC press release really could be!
Maybe most importantly, THIS IS NEW: “If transaction proceeds, OSH could potentially participate, either through use of PNG LNG infrastructure or integration into PNG LNG”. This implies that the Exxon deal is far enough along that Exxon has already informed Oil Search of the relevant terms and decision tree. Also, it implies that InterOil may in fact end up with an equity stake in PNG LNG.