08-21-2013, 10:50 PM
Lets be clear here. Interoil wants to close the deal with Exxon. For all the reasons previously stated, it makes a lot of sense for Interoil to partner with the worlds largest energy company.
1) Adding a 3rd train is the highest return option XOM is contemplating.
2) If XOM wants to add a 3rd train, gas from E/A is their only realistic option at this point. I believe OSH gas is at least 2 years away before they even know if they have gas let alone a sufficient quantity. XOM waiting for P'nyang is a huge risk for them.
3)Whether it's through participation or royalty, all parties benefit from a PNG LNG 3rd train.
Dr. Hession has participated in numerous deals over his 25 years. He knows the region well and has relationships with many of the big players. At least one previous bidder reapproached Interoil after Dr. Hession joined as CEO. Due to the exclusivity limitations, there were no negotiations. I have no knowledge if a previous bid changed. However, IOC is free to engage them at this point. Obviously, Hession was not part of the previous bidding process or negotiations. Even if Interoil opens discussions with one or more previous bidders, they are far from starting over. Extensive due diligence and discussions occured this spring. Exxon knows IOC has other options and is concerned about the low IOC pps as well.
Interoil does have a sense of urgency to close a deal. At least one large institutional shareholder has strongly expressed their desire to see a deal closed soon directly to Dr. Hession. If a couple issues can be dealt with, it will be Exxon.
1) Adding a 3rd train is the highest return option XOM is contemplating.
2) If XOM wants to add a 3rd train, gas from E/A is their only realistic option at this point. I believe OSH gas is at least 2 years away before they even know if they have gas let alone a sufficient quantity. XOM waiting for P'nyang is a huge risk for them.
3)Whether it's through participation or royalty, all parties benefit from a PNG LNG 3rd train.
Dr. Hession has participated in numerous deals over his 25 years. He knows the region well and has relationships with many of the big players. At least one previous bidder reapproached Interoil after Dr. Hession joined as CEO. Due to the exclusivity limitations, there were no negotiations. I have no knowledge if a previous bid changed. However, IOC is free to engage them at this point. Obviously, Hession was not part of the previous bidding process or negotiations. Even if Interoil opens discussions with one or more previous bidders, they are far from starting over. Extensive due diligence and discussions occured this spring. Exxon knows IOC has other options and is concerned about the low IOC pps as well.
Interoil does have a sense of urgency to close a deal. At least one large institutional shareholder has strongly expressed their desire to see a deal closed soon directly to Dr. Hession. If a couple issues can be dealt with, it will be Exxon.