06-14-2015, 10:34 PM
I agree Total would like to have the Certification amount be conservative, but per the SPA instructions it will be a bit difficult to force a lowball estimate. Also if any of the listed firms for Certification, Wild Card, Discovery Bonus, etc. have not done reservoir estimation work in PNG, they will not be eligible to Certify and another from the list must be nominated. The clause on this clearly states that if one has not done work in PNG OR is unwilling to provide service within tbe specified time OR does not agree to the appointment within the specified 20 days, the Buyer/Seller must pick another from the list for the job.
Also there can be no ex parte communications so as to influence (I know we can cough on this a couple of times). IMO even a conservative estimate doesn't hurt that much. Total for sure wants at least enough for the required startup of 2 trains and the larger the trains the better for efficiencies. Their exposure to the higher tier is fairly limited as the Certification payment is likely their bigger concern. If they are going to balk, we will see it with a choice by the JV to NOT drill Ant 7 IMHO. Ant 6 is already chosen and not expected to do much to move the needle per Hession's interview with Calio.
We also may not want too high of Certification as it would more likely prompt a buyout attempt, which mgmt has formed a strategy for. Total knows the bigger payoff is with future trains and may see a higher Cert pmt as a cost of getting in to this huge reefal basin.
Also there can be no ex parte communications so as to influence (I know we can cough on this a couple of times). IMO even a conservative estimate doesn't hurt that much. Total for sure wants at least enough for the required startup of 2 trains and the larger the trains the better for efficiencies. Their exposure to the higher tier is fairly limited as the Certification payment is likely their bigger concern. If they are going to balk, we will see it with a choice by the JV to NOT drill Ant 7 IMHO. Ant 6 is already chosen and not expected to do much to move the needle per Hession's interview with Calio.
We also may not want too high of Certification as it would more likely prompt a buyout attempt, which mgmt has formed a strategy for. Total knows the bigger payoff is with future trains and may see a higher Cert pmt as a cost of getting in to this huge reefal basin.