Thinking About the IPI Buy In

[johnwgrant]

Speaking of gov't opt-in. When are they obligated to make their election... Is it 5 minutes before the LNG plant starts to produce LNG (lol), or, is it at FID, or ....

[Palm]

Normally at granting of the PDL I believe. That's what IOC has had as a disclosure in its financials.

[johnwgrant]

Does the PDL come before or after FID ?

[sfiaes]

Let's be clear, all of the numbers that IOC quotes, the $613, $1.5B, $3.4B ... assume that they own or control the IPI stake. According to the PR the deal cannot go forward until the minority interests have been bought out. Hession stated there are only two parties IOC and TOT.

Tree states: "They (IPI) have been negotiated with by IOC and their collective interest could be re-sold as the 19.3% interest which TOT plans to peddle to a strategic partner for development."

First, does "have been negotiated with" mean that IOC has purchased them?

Second, 19.3% is misleading. The only time they would own 19% is pre TOT but post PNG - So I don't think you should necessarily relate TOT's statement of 19.3% and IPI ownership.

I took TOT's statement that they and IOC could farm out an additional 19.3% as just that, post deal they could sell 19.3% on a pro rata basis presumably at a much higher price than what TOT paid. This would help TOT recoup what they paid IOC up front and of course help IOC recoup what they paid to IPI.

Tree also said: "Some are of opinion that the base line deal between IOC/TOT for IPI stake is shrewd and some IPI partners feel they can market that block to a qualified strategic at a higher price, thus, they keep the spread."

I think this means some IPI think they can get a better price than IOC is offering. They appear to have some leverage, since the deal can't go through unless they are on board. IOC may have to cut them in on any subsequent profits on resale.

[jft310]

The IPI have zero leverage in that they have a signed contract that dictate the terms under which they can be bought out . It's a legal document and has been followed as stated in the past. It's a question of when not if .They are getting 8 times their original investment according to the terms some say.

[Palm]

Yet an IPI is saying things have not been finalized yet.

[jft310]

Palm that's a hope and a prayer that the contract will be breached and it's been tested before.

[Palm]

Breached? How can you breach something that isn't absolutely final yet? As I said elsewhere, a value may have been agreed upon, but the means getting there is apparently a bit open. You know this.

[ArtM72]

The IPI have zero leverage in that they have a signed contract that dictate the terms under which they can be bought out . It's a legal document and has been followed as stated in the past. It's a question of when not if .They are getting 8 times their original investment according to the terms some say.

have you read that agreement with ICI?  An awfully expensive buyout price if ICI objects. That's why I say it's a Mexican standoff.   If they don't cooperate IOC can't buy them out because of the expense, the deal doesn't go through with Total, IOC loses its licenses for non performance and both organizations collapse, leaving Total to pick up the pieces.   That may be why Hession is so confident.   No deal or a bad deal with ICI is not an option.

[jft310]

Two subjects the value and the means

To an IOC investor the value is most important and that value was set by contract and can't be breached.

A new subject would be the means . And we agree. If shares there may be a best way to deal with a block of shares but that doesn't impact the number of shares. Who would want a large block of IOC shares. ?Many names in several countries come to mind. In the past it's always been shares.