PR: Ant-6 intersects top of reservoir

[sageo]

What evidence is there that dolomite extends further east?

Thy - As you well know,none so far. I believe we are all hoping ! As Tusker says, "I think" I see it. He doesn't say "it is there" .I believe he is just havin' a little fun "while we wait".

[Li'loilady]

It would appear that Total is not "slow drilling" in order to delay the inevitable cert. pymt.

There's a good pic of a well groomed (a la Total) Ant-6 site on IOC's homepage.

Total's cost of capital is so low these days that many of us are over-estimating the difference to Total of paying for the larger amount of gas in the first certification or after the second one (5 years later, my guess).  Much more important to them (and their bankers) is certainty of the resource and pre-sale pricing, which leads to A7, slowly, so that the gas market recovers.

That dynamic has made a lot of sense to me, David.  In particular, the pre-sale pricing issue.

[Stavros]

FWIW

Although TOTAL has a relatively low Weighted Average Cost of Capital compared to other Super Majors (6.54% vs ~9%) its recent history of return on invested capital is NEGATIVE ... which means for them to borrow to invest in a project is like burning the CA$H. They must start showing measurable progress in improving their business.


Total SA (NYSE:TOT)
http://www.gurufocus.com/term/wacc/TOT/W...Total%2BSA
Weighted Average Cost Of Capital (WACC)

6.54% (As of Today)

As of today, Total SA's weighted average cost of capital is 6.54%. Total SA's return on invested capital is -0.81% (calculated using TTM income statement data). Total SA earns returns that do not match up to its cost of capital. It will destroy value as it grows.

BY CONTRAST ...

Exxon Mobil Corporation (NYSE:XOM)
Weighted Average Cost Of Capital (WACC)

9% (As of Today)

As of today, Exxon Mobil Corporation's weighted average cost of capital is 9%. Exxon Mobil Corporation's return on invested capital is 10.27% (calculated using TTM income statement data). Exxon Mobil Corporation generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases

AND

Chevron Corp (NYSE:CVX)
Weighted Average Cost Of Capital (WACC)

9.92% (As of Today)

As of today, Chevron Corp's weighted average cost of capital is 9.92%. Chevron Corp's return on invested capital is 5.05% (calculated using TTM income statement data). Chevron Corp earns returns that do not match up to its cost of capital. It will destroy value as it grows.

AND


BP PLC (NYSE:BP)
Weighted Average Cost Of Capital (WACC)

8.85% (As of Today)

As of today, BP PLC's weighted average cost of capital is 8.85%. BP PLC's return on invested capital is -4.67% (calculated using TTM income statement data). BP PLC earns returns that do not match up to its cost of capital. It will destroy value as it grows.

[Li'loilady]

Continuing:

I'm not in the gas business but, the only other strategy to maximize profits that I can construe would be for Total to hurry-get-it-to-market at short term spot prices, make some dough, then set up long term contracts after recovery.  I have no idea if that's even a reasonable approach.

Does anyone know if that strategy has been taken in historically corollary situations?

How would the info that Stavros just posted impact their strategy?

[jft310]

LNG contracts today are variable based on oil prices . Total historically has not used spot contracts . Uses only long term contracts . Read my post "step on it " from the economist . Everything is in flux as we get a world LNG market . Bodes very well for the low cost providers .
Total has some higher cost projects they need Papua to lower their LNG portfolio costs . A larger plant helps everyone .

[Putncalls]

How do we know that they expected the resevoir to be ~200-250ft higher?

Thanks

[Stavros]

You may recall that a few weeks ago Petrengr1 speculated that the Reservoir would be encountered at a depth of something less than 2000 m below Sea Level.

He based his speculation on published IOC Maps and Cartoons.

I value his musings far more than I do the Drivel issued by IOC.

[Putncalls]

If those maps are expectations I estimate that would be about a 6% reduction in the volume of the field.

[Stavros]

Yet again Putz, you're able to calculate the PRL Resource for IOC and TOTAL ... they don't have to spend million$ to hire Experts!
One small part of the field drops off a bit faster than hoped-for.
Field volume is only one small part of the equation.
What's the porosity and permeability?
Where is the GWC?
You are a dolt ... at best.

[Stavros]

Yet again Putz, you're able to calculate the PRL Resource for IOC and TOTAL ... they don't have to spend million$ to hire Experts!
One small part of the field drops off a bit faster than hoped-for.
Field volume is only one small part of the equation.
What's the porosity and permeability?
Where is the GWC?
You are a dolt ... at best.