admin, you certainly make some valid points, but I think some of them are getting a more negative assessment than they should.
1. I agree there is a strong impression among most that the apparent likely $/mcf is lower than expected, but I think several factors are making that impression more negative than it should be and than the result may actually turn out to be. One is that expectations were too high to begin with for any buyer, including Exxon, perhaps mostly because of impressions from previous management. Also, there is so much potential variability in what the overall price will actually be just from the pricing structure relative to the resource appraisal that it is impossible to say what it will be. Most, including some now burned professional analysts, are unwilling to make estimates on other than conservative resource estimates, although RJ (regarded as being conservative in the past) is pointing out that the stock currently reflects a very low resource assumption relative to the previous certified estimates. However, management apparently believes there is very significant potential upside to current estimates, and achieved a no-cap price structure that could yield a much higher average price at the $1.29/mcf rate on all resource above 6.5 Tcfe, with deal terms that give them maximum opportunity to achieve higher resource certifications, including a second recertification beyond the initial recertifications in 2015, plus an exploration bonus in PRL 15 they seem to think will be significant.
Furthermore, this is a partnership deal with a mega-major which provides IOC with 30% ownership in an LNG project that almost certainly will be built, by Total, with two trains and probably expansion beyond that, which I think has huge value to IOC well beyond the so-called price per mcf that most people seem to be exclusively focused on. Westlake Securities did a thorough analysis using a wide variety of resource and other assumptions and risk levels, and assuming a two train plant is built with GLJ resource levels, arrived at a PRESENT VALUE for IOC of $131 per share, something most people are probably not even aware of. I also think something else people need to consider is that if IOC had done a deal with Exxon for 4.6 Tcf at a supposedly higher price per mcf, but for only that amount, and probably with less if any IOC plant ownership, it probably would have been difficult to find such a partner for the rest, if at all, and certainly at higher risk and significantly lower price.
2. I was thinking this and bothered by it, also. However, now I'm seeing references by Santos to PNG LNG expansion to four trains by about 2020, and I'm wondering whether that would have been all that much sooner than a Total/IOC two train plant. Furthermore, in the deal with Total, IOC is expected to get most of the payments for the gas resource in 2014 and 2015 anyway; and we have a sale and project NOW for ALL of PRL 15, not just 4.6 Tcfe.
3. I don't see how this deal leaves any more uncertainty about "the size of E/A and GLJ's assessment of it" than an Exxon deal would have. That also would have required additional wells and "delineation" of E/A involving probably no less uncertainty and maybe more, and probably would not have provided for the same exploration of other PRL 15 prospects, not to mention the potential bonus. Furthermore, we probably would not have a partner like Total standing ready to monetize ALL of PRL 15.
I agree with you about the drill bit. "Drill, Baby, drill," as expeditiously as possible.
Like all longs, I am hugely disappointed and angry about the stock, but I believe it is unjustified and that it will recover and eventually make new highs. I wish we had been able to accomplish the original plans or reached a similar deal a long time ago; but I like this deal. I believe it was the best available and really will be transformational for IOC, in an extremely positive way. I think it is probably time for us to put behind us the forensics about what happened to the stock and why, while trying to make sure they go after the shorts, and focus on what we have and why, and moving forward toward what should be a bright future, with financial resources and management for that future unlike anything the Company has ever had before.
PS: I've been writing this off and on most of the afternoon as I could and have not read any additional postings yet, although I see it's to three pages!
1. I agree there is a strong impression among most that the apparent likely $/mcf is lower than expected, but I think several factors are making that impression more negative than it should be and than the result may actually turn out to be. One is that expectations were too high to begin with for any buyer, including Exxon, perhaps mostly because of impressions from previous management. Also, there is so much potential variability in what the overall price will actually be just from the pricing structure relative to the resource appraisal that it is impossible to say what it will be. Most, including some now burned professional analysts, are unwilling to make estimates on other than conservative resource estimates, although RJ (regarded as being conservative in the past) is pointing out that the stock currently reflects a very low resource assumption relative to the previous certified estimates. However, management apparently believes there is very significant potential upside to current estimates, and achieved a no-cap price structure that could yield a much higher average price at the $1.29/mcf rate on all resource above 6.5 Tcfe, with deal terms that give them maximum opportunity to achieve higher resource certifications, including a second recertification beyond the initial recertifications in 2015, plus an exploration bonus in PRL 15 they seem to think will be significant.
Furthermore, this is a partnership deal with a mega-major which provides IOC with 30% ownership in an LNG project that almost certainly will be built, by Total, with two trains and probably expansion beyond that, which I think has huge value to IOC well beyond the so-called price per mcf that most people seem to be exclusively focused on. Westlake Securities did a thorough analysis using a wide variety of resource and other assumptions and risk levels, and assuming a two train plant is built with GLJ resource levels, arrived at a PRESENT VALUE for IOC of $131 per share, something most people are probably not even aware of. I also think something else people need to consider is that if IOC had done a deal with Exxon for 4.6 Tcf at a supposedly higher price per mcf, but for only that amount, and probably with less if any IOC plant ownership, it probably would have been difficult to find such a partner for the rest, if at all, and certainly at higher risk and significantly lower price.
2. I was thinking this and bothered by it, also. However, now I'm seeing references by Santos to PNG LNG expansion to four trains by about 2020, and I'm wondering whether that would have been all that much sooner than a Total/IOC two train plant. Furthermore, in the deal with Total, IOC is expected to get most of the payments for the gas resource in 2014 and 2015 anyway; and we have a sale and project NOW for ALL of PRL 15, not just 4.6 Tcfe.
3. I don't see how this deal leaves any more uncertainty about "the size of E/A and GLJ's assessment of it" than an Exxon deal would have. That also would have required additional wells and "delineation" of E/A involving probably no less uncertainty and maybe more, and probably would not have provided for the same exploration of other PRL 15 prospects, not to mention the potential bonus. Furthermore, we probably would not have a partner like Total standing ready to monetize ALL of PRL 15.
I agree with you about the drill bit. "Drill, Baby, drill," as expeditiously as possible.
Like all longs, I am hugely disappointed and angry about the stock, but I believe it is unjustified and that it will recover and eventually make new highs. I wish we had been able to accomplish the original plans or reached a similar deal a long time ago; but I like this deal. I believe it was the best available and really will be transformational for IOC, in an extremely positive way. I think it is probably time for us to put behind us the forensics about what happened to the stock and why, while trying to make sure they go after the shorts, and focus on what we have and why, and moving forward toward what should be a bright future, with financial resources and management for that future unlike anything the Company has ever had before.
PS: I've been writing this off and on most of the afternoon as I could and have not read any additional postings yet, although I see it's to three pages!