Antelope 7

[Relker]

I bet they wait on the wild card . They can borrow 70-80 percent of LNG plant build costs so cash for the build should be sufficient . I do not think they have enough cash to pay corporate overhead for 4 years or so and explore more of their acreage . Will require more debt and or an equity raise to bridge into cash flow or one heck of second sell down or several years from now a second certification. As far as amount of gas no one really cares about gross gas it just means nothing as in nada . Recoverable gas is what we get paid on at P-2 level and GCA and GLJ are based on recoverable gas . If we hear about 9.5 T number as some say it will be recoverable gas cause gross gas means nada .

IOC corporate overhead roughly amounts to USD 0.1 B per year. I can not imagine that this will have a big effect on operation the coming 4 years:.

Cash flow  coming 4 years:

Cash per 30.6 2015                            0.5

• License payment E/A :                  3.5      (the upper GLJ case is considered as the medium case by IOC)
• Already received license             -0.4
• Equity investment  JV                   -1.8
• Corporate overhead                     -0.4
• Drilling                                            -0.9

Cash per 30.9.2019                          0.5          

Relker: We should be looking at costs from now until 2022 when there is cash flow from Papua LNG:

1. I think IOC's contribution to the project equity is more like $1.5 Billion = = = Add $0.3 Billion to your figure

2. You don't include any income from selling down other resources in the next few years - Triceratops, Raptor, Bobcat and Wahoo will all have partners = = = Add $1.0 Billion

3. You don't include corporate overheads and drilling costs for 3 additional years (startup will be in 2022) = = = Subtract $1.2 Billion

4. You don't include the Government's payment of suink costs when they take their 22.5% NET share of the project = = = Add $ 0.1 Billion

===> Net outcome is the same as your figure, but extended to 2022

MY BOTTOM LINE: AN ANNUAL CORPORATE OVERHEAD OF $100 MILLION (excluding drilling costs) IS FAR TOO HIGH

1. I do agree that it is likely that a second project will start in the coming 4 years.
2. The payment of the sunk cost will go the JV and will reduce the investment.
3. The size of the project is not yet decided. Total is building in Yamal 3* 5.5 mmta. I expect something similar in PNG.with the 3rd coming on stream later.
4. Time planning for contracted sales starts in 2022. Normally speaking they are ready somewhere at the end of 2020 and can start selling.