PNG Wanting 50% of E/A is a Head Fake

[ArtM72]

IOC by agreeing to sell PNG as much as 27.5% does not necessarily lock in a losing proposition for IOC by any means. They may have agreed to concede a more profitable position for purposes of public relations. Has PNG ever reimbursed IOC when the company heli-transported seriously ill people out of their villages to hospitals? Is anybody here saying that kind of activity has been either good or bad for IOC in its long term relationships in PNG?

For one I'm hopelessly stuck on the geological science reports, IOC's apparent effective use of state of the art geologic investigation tools, its continued ability to make money in its refinery with an unbelievable safety record, and what I see to be a very real interest in the development of a young nation. There even might be other people with MUCH larger stakes in this than I for similar reasons.

I'll try to stop my qualitative musings. Quantitative geologics bear the truths.

[ArtM72]

Here's another thing. I would dearly love to see hydrocarbons in the Fish Field. I just can only say it looks oh so promising. If the tunas and the sharks and the rest of those bumps on the fishfinder turn out to be real this game takes on an entirely new dimension. That in my mind is where the big dogs are playing.

Sure, E/A alone is easily worth $200/share. Just what if those fish can fart?

[Tree]

Couple of other points: 1. PNG LNG development costs that must be paid are sunk costs and are paid on the back end out of their share of LNG proceeds. That gets rid of the very near term requirement of funding the cost, but also delays cash coming in from sales starting in 2014. What that leaves them with initially is royalties and taxes, and that's why people have been saying the project alone does not get them what they need. 2. The up to 27.5% option being built into the agreements gives them the flexibility to figure out some things. Get the IOC project approved and moving and have the option in the pocket. Partial sale, total sale? Can be decided, but project needs to get approved and moving.

3. If you want some ready cash and the most valuable is a sure thing, and you are confident of the future development of your resources, what is the BEST thing to consider peddling all or a portion of? Your PNG LNG ownership maybe? Get out from under a cost blowout project an get the ST cash you need. PNG's most difficult time is the NT. LT with the SWF run properly they will have billions stocked away. Capitalize now on the first LNG project.

That McDuck is a move that makes sense.  Revenues which are years away and smaller in comparison to Gulf LNG is not the best way for PNG to manage national wealth.  It's much easier to make a buck on $.12/M  gas than $5/M dry gas.  Bet the Chinese would buy another 20% PNG LNG at a friendly price if JP/SK didn't.  Holding onto PNG LNG is like placing your 'nest-egg' in tax-free munies, the only problem is PNG hasn't a nest egg yet and is in their high overhead period of building the nation.  The best move could well be sell that asset today.

That's sume fancy fine  work  here and that ain't no GroupThink!

Oooops, that slang may offend hillbillies.