WWW (While We Wait) !!!

[johnwgrant]

Idle thoughts...

1) Does InterOil REQUIRE a supermajor ?     Does a supermajor have technology (think LNG processes and blueprints !) that InterOil must have ?

2) If JKM is high bidder at $2.25/mcf (plus they will provide cheap financing), can InterOil license the LNG plant technology (say from Conoco-Phillips), get it build by one of the big engineering firms, hire a contract operator to run it, and use the proceeds of the financing for their exploration needs?

3) How important is it to InterOil to speed up their exploration?    (They are facing drilling deadlines that they will miss unless they get approval from PNG gov't to move the deadlines.)

4) Is there any possibility that XOM/Oil Search will buy gas from InterOil to feed their LNG plant ?   (If I am XOM/Oil Search, I would rather just drill some of my own leases rather than buy from InterOil - but what do I know !?!?)

5) Can InterOil have multiple "successful" bidders - ie, accept multiple bidder proposals?     For example:   JKM is high bidder on the selldown but Total offers technology/LNG expertise, drilling rigs and crews, etc.     Could InterOil accept both bids - but,  reduce their percentages.     For example:  JKM wants 25% as does Total.   InterOil accepts both bids BUT each only gets 15% (for a total of 30% - the other 5% coming out of InterOil's percentage)!!!!!

6) Does EWC and FLNG even show up on the radar?     Is there a potential for them to be part of the NEXT 3.8 mpta LNG 'plant' ?

Comments ?

[dorr9352]

Question for the board. If BOD were to have a clear cut winner that they can decide on immediately, could they come out with a announcement, within the next few days, stating it as simple as that we have concluded our review of bids submitted and have chosen a partner? We will be formally announcing the name of that partner at a special signing ceremony to be held in the near future with all parties involved along with govt. officials. That would give them time to complete the legalities and work things out with the govt's involvement, but yet let shareholders know "informally" where we are at.

[jft310]

There are disclosure rules as to material information which must be disclosed. So Dorr I guess your scenario makes great sense.

[Palm]

Idle thoughts...

1) Does InterOil REQUIRE a supermajor ?   PNG stated they must have an experienced operator, not a SM. Hiwever IOC has stated that thy have at least 2 bids from SMs.   Does a supermajor have technology (think LNG processes and blueprints !) that InterOil must have ? Yes and no, but obviously if that were absolutely the case png would have required a SM. They have not. There are certain processes that COP or others have developed, but they license that out. 

2) If JKM is high bidder at $2.25/mcf (plus they will provide cheap financing), can InterOil license the LNG plant technology (say from Conoco-Phillips), get it build by one of the big engineering firms, hire a contract operator to run it, and use the proceeds of the financing for their exploration needs? Can look at the PNG LNG project as a model. The partnership formed will hire the contractors who will have bid based on the technology/process chosen by the winning bidder. The winning bidder likely will oversee the construction like XOM has on PNG LNG. Someone (IOC hopes its them) will be in charge of exploration and they will do the exploration, pitch in their share and other partners will pitch in theirs. Again, look at XOM/OSH. 

3) How important is it to InterOil to speed up their exploration?    (They are facing drilling deadlines that they will miss unless they get approval from PNG gov't to move the deadlines.) It's crucial especially since they'll likely be responsible fir the exploration. They'll continue to work with the government on the licenses but will have to drill, discover, get PRL and other licenses. They'll need more rigs and/or contract out drilling. PRE could also play big role. 

4) Is there any possibility that XOM/Oil Search will buy gas from InterOil to feed their LNG plant ?   (If I am XOM/Oil Search, I would rather just drill some of my own leases rather than buy from InterOil - but what do I know !?!?) Thats easy; Yes it's a distinct possibility either now or down the road. 

5) Can InterOil have multiple "successful" bidders - ie, accept multiple bidder proposals?     For example:   JKM is high bidder on the selldown but Total offers technology/LNG expertise, drilling rigs and crews, etc.     Could InterOil accept both bids - but,  reduce their percentages.     For example:  JKM wants 25% as does Total.   InterOil accepts both bids BUT each only gets 15% (for a total of 30% - the other 5% coming out of InterOil's percentage)!!!!! I think very unlikely we have 2 bigs with equal shares. Could in end have structure kind of like PNG LNG where a couple of minority strategic partners come in but that likely would be after selldown and there are more knowns etc. 

6) Does EWC and FLNG even show up on the radar?     Is there a potential for them to be part of the NEXT 3.8 mpta LNG 'plant' ? EWC probably small blip at this point, Flex got sunk by SHI's battleship this week. SHI said sorry, we are not refunding any money and contracts are bye-bye. There will be some legal stuff but Flex is limping back to port. 

A thing to guard against this weekend is expecting an announcement Monday or possibly this week. Could happen but also don't know for sure what's all going on this weekend, how much question/ answer needs to take place etc. IBs run the show for a bit to be sure best decision is made. But if its a slam dunk, could come anytime. 

Comments ?

[Petro2458]

I could be wrong, but regarding number 5...it's a very good question and could be a delay item. So...I believe that the negotiations over last several months have already structured the equity ownership that each company type could submit a binding bid for. This way, IOC could select a combination of partners. It would seem that XOM for example could submit a bid for 20% and for 30%. And a potential non-operated partner could bid for 10%. This would allow IOC to either pick 1 partner for 30% or 2 partners for 30%. I'd like to think all the time that has passed was ensuring binding bids were in a form such that IOC would not have to revert with structural equity changes to the bidders.

[Petro2458]

If a partner is not announced this week, we can likely infer that 1. Bids were not accepted due to price offered or 2. The structure and conditions needs more work (I.e. whole process in limbo waiting on more negotiations). Or 3. Structure or equity of binding bids has to be reformulated...JKM gets more% or gets non-op equity vs operatorship...I believe there is a mix of bids that will be most valuable. So really really hope IOC has planned for this.

All 3 are not good from a stock price standpoint....I expect IOC has done this such that they will be able to select partner(s) straight away. Of course, conditions from a major could very well be related to the type or perhaps a more specific list of non-operated partners that IOC could select or that XOM would not want to be a partner with....

[Palm]

"All 3 are not good from a stock price standpoint"

Only if you have options riding on this Friday possibly. The company said in the most recent comments "March" not the 2nd week of March. That's out there. Big money and LT views won't be concerned if they don't announce a partner this week. Just got final bids 10 days ago and we have to expect that at least one came in as a surprise like eBay can be. What if someone unexpectedly decided to tell the BOD that they want to discuss pushing the "buy now" button?

[jft310]

Lets be direct the IOC BOD is meeting today and tomorrow and that purpose is to let the IBers review the bids with them. Exactly what comes of that is a guess. We do not the when, the who or the price but we do know 2 Super Majors, 1 National Oil Co and one Utility at a minimum have bid per WA at IPAA.
I am 100% the IOC Officers want this over so they can do something else.
Does that mean Monday AM ???Of course not!Could it be Monday AM well of course!

[ArtM72]

To Petro's three alternatives the simple fourth is getting PNG's final blessing which may take a little time itself. Always beware the Duma Duma bird, but I suspect he's been caged and O'Neil will be just as happy as everyone else to get things done and moving forward. Bottom line, Phil I bet does nothing without ON'eil knowledge and prior approval.

[Petro2458]

The government has to have given the bidders some assurances on the revised agreement framework...and the deal will be contingent on this. As soon as IOC hands over operatorship...the whole dynamic changes and so IOC could probably never get the final agreement struck as the new operator will need to get this done. So I suspect there are no further government hurdles for this deal. No super major would be in this deal if they didn't know exactly what the terms would be...understanding the development plan details come later.

That said...I think once the partner is selected ( this weekend): the only hang up will be organizing a joint press release with said company. This is going to be fun. JFT is right...all guesses