Looking like Buy-out attempt

[Petrovale]

Interesting thought. It's not just about financing the PNG stake, it's about the total financial plan leading to FID. I keep thinking about the PNG LNG deal, where XOM was preferred over Petronas, although the latter - apparently - offered much better terms regarding project economics. But, with XOM, PNG got its IPIC bond arrangement and multi $ billion offtakes.

[admin]

That is a pretty astute observation, Petro..

[trans]

Ain't no way PNG is looking at 50% unless China is involved somehow. Then this could make sense. PNG has no funds and would need a CNOOC is something to buy, then have Shell be the operator. Shell is China's international developer of energy assets, so that would make some sense. Oneill just returned from China and was in Russia just prior. Russia just struck big deal with Japan. Japan and China are face to face over the islands that Japan just "bought". China well could be making a play. Then we have JKM on the other side of the table. Nice game of Risk going on here.

[trans]

Palm, agree, This has china/rds written all over it likely. What would you think if NEC approval is for today's reported deal specifically, price rallies, then RDS comes out with some further low ball noise, knocks ioc price lower again somewhat, and then bids for whole ioc? Important for us to understand, what would come next after this scenario? Will others have sure chance to bid? tia all.

[Palm]

Trans, from credible sources it most likely will be NEC approval similar to before; approval of location, start-up volume, max volume, gas agreement with Petromin, gov share, etc. Also likely is standard buy-in by gov being back-loaded, but with the option to buy in up front etc etc. Doubt we get a prescribed buy in with players mentioned etc because that's not what they do with an approval. And with info that bidders increased after election results that process is likely ongoing which is good. Some people say PNG has no real interest in the sell down price but I disagree. Petromin's buy in is at sunk cost, not value. So they have a vested interest in the SD price being as high as possible. That's why this talk is somewhat interesting of a possible higher % buyin by Petromin. IF Petromin can buy more than the 22.5% AND buy that at cost, they can profit handsomely from then turning around and selling the "excess". I would hope that the law prevents something like this because that's getting a little close to nationalizing the asset. Hard to believe that could happen and IOC would have reason to fight that. So anything above the 22.5% will have to be at a "market" price based on bids.

I agree with Petro on overall financing for FID. This process must end up with havin a very good chance of being a slam dunk for financing. The interesting piece in this is if EWC is going to be part of the PRL 15 project or is better suited for Tri/Bwata. Financing is key and that goes a lot to offtakes. If EWC has people that are end-users and not just brokers, it will have a better chance. XOM could be an important player there. If it comes down to a battle of the giants (China/Shell vs JKM) it's going to be a interesting play. JKM seems to think they are IOC's savior and may be able to pay less. China/Shell feel they are the insider play through Petromin and should pay less. But there are other bidders we hear and if they can come with the ability to finance things to get FID, price will go up.

Fun game, but IOC will win no matter what. I can't believe that with what is going on in the world anyone will steal these assets. If we could only find some cash though!!!! Hohoho