Conflicted BOD

[Tree]

Our new Analyst from West Lakes is not conflicted.  He's expecting a couple months process.  It could happen this week for all we know but smart and sane $ is to sit back and let these IBs and BoD go through the selection process.  No one ever said there would only be 1 BoD meeting either and I expect there to be a few BoD meetings along the way.

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William Christopher McDougall - Westlake Securities LLC, Research Division

I'm looking forward to hearing the results on the bidding process. I wanted to understand a little bit of the process with communicating with the market over the next few months, will it be kind of one update at the end when you accept the bid? Or will there be some interim updates?

Phil E. Mulacek - Chief Executive Officer and Director

I mean, as we need to disclose under law, we'll complete and comply with proper disclosure. We -- it's -- I don't want to say it's too premature, but we wouldn't want to talk and be prejudicial where any comments affect the final outcome. I mean we have waited this long. We have never had better interest. LNG prices this winter have been some of the highest. We saw over $20. We saw $19 earlier this month, $19.50. And when everyone was claiming 6 months ago, we're going to see some U.S. parity and that was an absolute falsehood. So I mean we're coming together on the timing at no better -- we don't want to jeopardize that. So as we have requirements, we'll complete and we'll announce it to the market.

[sageo]

Tree- I have (compliments of a good friend) ,a copy of the 30 page report by McDougall .IMHO it is very well explained. I believe I understand your thinking, but  couldn't we just accept the best offer now for the first train,get things moving forward,and then seek even better terms as more prospects are proven up ? After all, Tricera is now being referred to as "Greater Triceratops" by more parties in their research !! Your thoughts on waiting longer has merit, but delays don't always bring gauranteed better results. Just thinking out loud,for whatever it's worth. Thanks for all your  work .

[Tree]

Tree- I have (compliments of a good friend) ,a copy of the 30 page report by McDougall .IMHO it is very well explained. I believe I understand your thinking, but  couldn't we just accept the best offer now for the first train,get things moving forward,and then seek even better terms as more prospects are proven up ? After all, Tricera is now being referred to as "Greater Triceratops" by more parties in their research !! Your thoughts on waiting longer has merit, but delays don't always bring gauranteed better results. Just thinking out loud,for whatever it's worth. Thanks for all your  work .

Hey Sageo,

I'm not a proponent of 'waiting longer' and I don't agree anyone has 'delays' as a negotiating strategy.  Surely none of us knows the bid dynamics or the bid process going forward.  An educted guess could be as follows:

IOC and IBs defined what exactly is for sale.

IOC and IBs defined minimally acceptable bid, reserve price,  for the stake and IOC 'Buy it Now' price.

A 'conforming bid' would meet the reserve or minimum price for the defined sale.

IB's marketed this stake and when # of bidders  or bid $ reached tipping point the bidding period closed.  That was Feb. 28th.

It is implied 4-5 bidders are in the final pool.

BOD met last weekend for initial bid review.

As in E-Bay auction, could IOC's 'Reserve Price'  been met but the 'Buy it now' price hasn't?

What if the bid sale provisions allow for IOC to seek re-bids from any/all bidders if no bidder met IOC's 'Buy it now' price?

Re-bids would undoubtedly attract higher bids the second time around and may even seduce a 'Buy it Now' bid.

High stakes dynamics involved here.  How high does one bid to win and be below the asking price?

All this is pure conjecture on my part and to me it makes sense, more sense than there is trouble brewing.

It appears obvious the IOC and the analysts don't know exact timelines to complete this selection but it is expected by both to be within 2-3 mos from the close of bids.  Or it could be announced tomorrow.  As usual, we patiently wait as these experts in transactions like this do their jobs.

[bertl05]

Its irrelevant at this point wether the bids are below what IOC dreams of getting. The bids are the bids, I doubt there will be much I call and raise you action. Bidder fatigue sets in at some point. Wether or not anyone wants to admit it, there are other sources of LNG. Its not a must have for any bidder. They will offer wht their advisors and mgmt see fit, not a penny more. Its in IOC's best intrest to take the best offer. The process has been long enough already. I also think that time is on the bidders side, not IOC's. I'd think the govt wants something done soon, and will make sure that is the case if IOC doesnt, which would probably not be the best scenario. All my opinion.

[Palm]

" I'd think the govt wants something done soon, and will make sure that is the case if IOC doesnt, which would probably not be the best scenario. All my opinion."

Let's not also assume that the govt at this point has ITS act totally together. The only deadline set in mid-Nov was by the govt on itself; report back to NEC through the Gas Committee by Nov 30. We know that didn't happen and we know that soon after that "the national government" suddenly fired up NPCP and gave it great authority previously given to Petromin. I think it's just as likely that IOC is the one (with a nod from the govt) to set the deadline of Feb 28. I don't think it was complete coincidence that on the 28th the govt reps (minus Duma) visited the EA upstream area and were greatly impressed. They don't trust that Duma is giving them the whole story. That's his job to visit a development site like that and Oneill and the rest wanted to see for themselves what's all going on up there. Now they know and THEY can report to NEC that this project is ready to move ahead quickly. I believe IOC and the govt are working together closely and Petromin is going to be dismantled in favor of NPCP.