What does "In-Kind" Mean

[Putncalls]

If they get 22% of the initial production that would be about 1MTPA. At 7 bucks/MCF that is 350$/tonn or 350 million per year. If they used that energy at 45 MJ/Kg that would be 45 trillion joules per year there is 3.6 million joules in a KWH. If 2 thirds of that was lost generating electricity that would be 15 million KWH a year.

My calcs are a little different, showing 1 MTPA to be roughly 659 megawatts of electric generator capacity running 24/7.  Key conversion factors being  49,200 cubic feet per metric ton, .2931 watt-hours per BTU, 1,000 BTU/cf, 40% generating plant thermal efficiency.

So  my bottom line would be that 1 MTPA would be plenty adequate for around 1,000 megawatts of electric power generation capacity.  Somebody with a "rule of thumb" handbook should confirm.

Actually I got 4.5 billion KWH. This agrees with your numbers except that I used 33% effeincy,

[Tree]

I have not discussed this with the Company but my guess is that the Government will still have to pay a tolling fee for the CSP and pipeline. They will also have to pay their share of the sunk cost for the field development. “In Kind” means they will take their share of the gas (22.5%) as “dry gas” instead of money. They then have the option to use the dry gas for any purpose they want without having to pay for 22.5% of the LNG plant. They will also be entitled to 22.5% of the condensate but they may prefer to let IOC handle it for them for cash instead of taking it "in kind". They could use their gas for power generation, fertilizer plants or any other gas based industry. Here is one for you from left field. They could sell it to Exxon while they are waiting for their Power Plants, distribution network and Fertilizer Plants to be built. They could probably get $5-$7/MCF for it without having to pay for an LNG plant. Just something that occurred to me and, therefore, just an opinion

Not out of left field at all.  Kinda looks like this was either the plan all along - or - it was IOC's plan and it morphed into PNG's deal to sell to XOM as way to 'self-finance' their ustream opt in and stake in Train 2.  This benefits XOM, PNG and IOC.  All compromised and IOC with investors now owns 100% of the first train.  Toot Toot

Aug CC 2011:

'Jason - Macquarie 
Just to start out, Phil, I appreciate your comments about the valuation. I just wanted to make sure I understood your comment correctly. When you said a partial sale of equity that could be in the $5 to $7 an Mcf range, is that a direct comparison, then, to the roughly $0.35 an M that is being built into the equity right now? Am I interpreting that correctly?'

Phil - InterOil Corporation - CEO 
'Yes, sir. So you have to figure it out. So all I'm saying is, we had the same absurdity once before in our history. And I've never
seen such an extreme as we have today.'

[jake990037]

Here is official press release from O'Neill.
http://www.scribd.com/doc/113416961/PNG-...NG-project#

I have a concern that all the power in these negotiations on the terms for the additional 27.5% lies with the PNG govt.. We will have to see what terms are agreed (hopefully not imposed) but I see why the situation could read like a partial nationalization.

Tell me why my concerns are misguided.

[TxPm]

Maybe I'm missing something but doesn't this document go against everything we were just told by Mgmt this morning?

[petrengr1]

Here is official press release from O'Neill. http://www.scribd.com/doc/113416961/PNG-...NG-project# I have a concern that all the power in these negotiations on the terms for the additional 27.5% lies with the PNG govt.. We will have to see what terms are agreed (hopefully not imposed) but I see why the situation could read like a partial nationalization. Tell me why my concerns are misguided.

Jake- This is the first time I have seen this "official" press release from Mr. O'Neill. I can see why you are concerned. This looks like what we had heard a few days ago and I thought Phil was down playing that possibililty today because the Government didn't have any money. Now they want 50% and they want it to be sellable which to me means it needs to go through an LNG Plant. Also they say they want 2 separate facilities. Looks like a big "grab" unless they are going to have someone like Shell finance their share and build a separate LNG Plant. I am with you, I am beginning to need a lot of help to understand what the Government wants.

[Palm]

It is not nationalizing the asset. The O&G Act clearly states that the State pays sunk cost for its initial 27.5% and must pay market for anything above. It also states this must be hammered out by Nov 30, 2012. PNG must be able to prove that it can front the additional 27.5% of upstream development cost to make the project bankable. They state this is a very important project and by making this election must be sure that it can be "fast-tracked". So is this how Shell will buy in? Who knows but this is anything but bad.

[Tree]

Here is official press release from O'Neill. http://www.scribd.com/doc/113416961/PNG-...NG-project# I have a concern that all the power in these negotiations on the terms for the additional 27.5% lies with the PNG govt.. We will have to see what terms are agreed (hopefully not imposed) but I see why the situation could read like a partial nationalization. Tell me why my concerns are misguided.

Jake- This is the first time I have seen this "official" press release from Mr. O'Neill. I can see why you are concerned. This looks like what we had heard a few days ago and I thought Phil was down playing that possibililty today because the Government didn't have any money. Now they want 50% and they want it to be sellable which to me means it needs to go through an LNG Plant. Also they say they want 2 separate facilities. Looks like a big "grab" unless they are going to have someone like Shell finance their share and build a separate LNG Plant. I am with you, I am beginning to need a lot of help to understand what the Government wants.

Thanks for this Jake.  Liam Fox this a.m. said the 50/50 deal was about a $3 Billion deal and there wasn't an indication how PNG intended to pay for their share.

We do know meetings are schedued tonight US time in PNG to negotiate the commercial terms.  We hve heard previously that PNG would buy into a larger position at terms matching others.  There has been chatter of a 2nd processing faciity and could well be IOC's 1st 4 Tcf goes to Gulf LNG as advertised earlier and 2nd 4 Tcf goes to a 2nd plant, presumably with Shell.

This doesn't appear to be a power grab at all to me.  It is dated so IOC would have had this late afternoon US time yesterday I think. Exact time doesn't matter and this weeks negotiations could render this agreement here either obsolete or not in it's final form.  Bottom line IOC has approval for Gulf LNG in Gulf Province for the start up volumes being shopped.

[Putncalls]

The government can't cause a gigawatt of electrical distribution to happen any time soon. What makes you think they need twice that now? The 22% they already own can supply almost a 1000 KWH per year per person. This does not include triceratops or other finds.

[TxPm]

My biggest concern is that if Liam Fox knew about this document this morning then obviously Phil knew about it this morning on the CC. Why was it made to seem that the 50/50 split was out of the question & why was the term "In-Kind" used several times in the CC? This needs to be addressed by the Mgmt soon or we need an NEC announcement to officially announce an outcome soon

[bertl05]

Txpm, I had not seen the PR from the PM before either. It certainly is presented with a different slant than what I thought I heard on the CC. I'll listen to it again tommorrow. But you are correct that they used "in kind" . The 2 separate LNG facilities has me scratching my head too. Lots of tea leaves with this story thats for sure. But it is hard to dispute the PR Jake posted. that looks pretty legit.