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I would expect that a press release would require a quote from the SM... Could take a day or so to organize
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pickboone take
The Exxon wild card and implications for IOC
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On March 6, Exxon issued a presentation for its annual meeting in which the second "New Development" in the entire presentation is its PNG LNG Project. The fourth bullet on slide 32 of the presentation states, "Adding resource for a potential third train" and there's talk about adding additional trains beyond this.
On the previous day, an article in Islands Business included the following quote from Oil Search head Peter Botten, “If Oil Search was to keep growing in PNG it has to make major acquisitions and it has to buy the major companies”.
Given the marginal cost of adding LNG trains (a 2003 EIA paper estimates capital costs of less than $200 per ton of annual liquefaction capacity for trains at existing plants) and the accelerated time horizon for commencing new production at PNG LNG, InterOil's gas should be worth way more than the ~$3 per mcf at which PNG LNG transactions have occurred in the past. XOM's ~7 mtpa plant will cost almost $20 billion, but if an additional train costs even $500 per ton to build, that would equate to less than $2 billion. Adding another $500 million for the pipeline, XOM and OSH could theoretically increase PNG LNG's capacity by 50% for an additional investment of 10-15% of its cost for the first 2 trains.
The XOM & OSH option has major potential implications for not only the Elk/Antelope sell-down, but also for Triceratops and for increasing the probability that IOC will soon be acquired. For those who listened to XOM's annual meeting presentation, you would know how upbeat XOM is on PNG at the moment
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in response to pickboone we see this
iluvioc•10 minutes agoFlag
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Reply
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The fog begins to lift.
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Hey JFT
I agreewith your take based on three singing birdies in my bushes.
They're whispering that two bidders are shortlisted for further nego.
Translation .... "bidding war"
Thank you very much .... Elvis is in the building!
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I think too much is being read in to the timing of an announcement. I agree, IOC had an acceptable bid in late January and allowed them to put a deadline on the partnering process. I don't know if they received any bids that exceeded expectations but I am confident they received bids that met expectations. There have been some excellent and detailed posts here of why a lag may exist from the time Interoil makes a decision to the time that decision is announced. Nothing negative should be inferred from that gap other than there are housekeeping items to tend to prior to making a public announcement. The company has tried to guide us away from having expectations of an immediate announcement. My personal expectations are for the partner to be announced the 2nd half of this month. The market seems to agree when you look at April options premiums.
Some of the prices I am seeing here seem on the high side. The 4 year average of deals in the region is approximately $1.20/mcf. There are compelling reasons why that should be higher for the Gulf LNG. However, there will also be a discount applied due to this beng an Interoil lead project a few years out from production. I expect anything from $1.25 to $1.50.
Finally, I would not be suprised to see JKM, Total, or even Exxon as the winning bidder. My conversations have led me to believe the November 15th approval by the NEC of a contract operator for the Gulf LNG was significant and I've leaned towards JKM. Tree made a great case for Total and Exxon would have every reason to want "cheap" IOC gas. Of course, I still can't fathom why a SM wouldn't want to attempt a complete buy out of IOC. It makes so much sense! And i can also ad with confidence that each bidder was pre approved by the PNG govt!!
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Agree that this is likely going on and it makes sense since until January the Ant3 well was just confirming the IOC statements that Ant is a continuous structure and the bid deadline was announced. To that point the best bids had not necessarily been submitted. What all came in through Feb 28th likely contained at least one pleasant surprise and based on that the company has said they will be meeting with the IBs continuously and that means some Q&A for clarifications with bidders as well as the government. As well teh government needs to conclude negotiations with IOC regarding their ability to take anything more than their normal ownership interest. My guess is that O'Neill is (or has already) telling the PNG Negotiating Team responsible for the up to 50% option that the time is up and please report back to the Gas Committtee what your final answer is. You've used up all of your life lines.
Bet Maui's ears are burning with all of the airwave activity.
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Everyone should reread stavros post he flys in the right bird flights.
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"Is JKM acceptable to the PNG government?"
They must be because all final bidders are approved by the PNG government. The only alternatives are:
1. JKM didn't participate in final bidding
2. CV is a liar and cheat like the rest of management and BOD.
