'will2bgreat' pid='68886' datel Wrote:Bull. Mike got Total signed up all right, but now he either does not have the courage or ability to stand up to Total and say, "we have a signed contract and I am going to hold you to that contract. We are moving forward with the certification and resource payment. It's that simple. Now if Total wants to drill another well; great idea. But we are going to renegotiate the contract and Total is going to pick up all of IOC's costs for the well. Otherwise, IOC is being put in a rather weak financial position.
The only thing I expect is clear, open, honest communication and that is not being done by IOC.
Just my thoughts.
Unfortunately, it is anything but as simple as you contend. Yes, of course we have a signed contract. However, that contract gives the 'operator' which is now Total, the full, unambiguous and unilateral power to declare the 'trigger date' which will begin the appraisal/certification process of PRL 15. IOC has absolutely no power to impact that declaration by Total. Total, under the SPA terms, must notify IOC of the "trigger date" within 5 days after the 'completion and testing of the final appraisal well' under the 'appraisal work program' of the contract. Under the terms of the "appraisal work program" portion of the SPA, the parties must drill 2 appraisal wells (Ant 4 and Ant 5), and may drill 'one or more additional appraisal wells'. They have drilled one additional well (Ant 6) and are now at the stage of determining whether to drill another 'additional' appraisal well: Ant 7. I believe that all 3 parties (Total, IOC, and OSH) are waiting for the OSH appraisal results (which are due within the next 30-45 days) to make that call. IOC can not force the decision on Total or OSH. [It could take the very expensive and extremely counter-productive tactic of suing Total under the terms of the SPA that require that the additional appraisal wells shall not adversely effect the ability to reach FID "in the shortest practicable timeframe." Naturally, Total's argument would be that it cannot reach FID without a full and complete appraisal of the resource, which would, of course in Total's estimation, include Ant 7. And IOCs argument in rebuttal to that would be ....?. None that I can think of, other than that IOC has a few shareholders who are frustrated with the time line of a $10+ billion dollar project taking place in a third-world jungle environment.
Once there is a final decision on whether to drill Ant 7, there are two routes available--one of which must be taken depending on the decision: If the decision to drill is a go; then Total drills the well and completes the well and testing and THEN must declare the 'trigger date' and start the appraisal/certification process. If the decision is no-go on Ant 7; then I believe that under the SPA, Total must declare the 'trigger date' within 5 days of the no-go decision on Ant 7 and the parties (Total and IOC) would move to select their respective appraisal companies under the SPA tems.
All of this is set forth in exquisite detail in the SPA that governs the relationship between Total and IOC in these matters. The situation that we are now in was under considertation when this contract was drafted over 3 years ago and shows the long-term and strategic thinking that went into the contract. The many terms that were negotiated into that contract that benefit IOC and are not 'industry-standard' are, in my opinion, the very reason that the 2013 BOD hired Hession in the first place. And as Tree, points out, that BOD was put in place by Phil, not Dr. Hession.