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Itn-Basic accounting we need a debit and a credit. If Exxon is spending money to delineate the wells in PRL 15 as per the P/R then one needs to account for the money. That adds to the effective price per share
Your list does not account for the a major expense-drilling to now be paid for by Exxon vs IOC. That must be accounted for. Added to IOCs side of the ledger. Increases the effective price per mcf.
Further I was told there would be a pipeline expense which may be different than your explanation. Exxon would pay for the new pipe. Which also would change the effective price per share.
The ownership percentage of the LNG also effects the effective price per mcf.
The beauty will be in the details.
I was told "Best possible outcome"
You say to ignore these Exxon dollar expenditures and concessions but the analysts will not ignore them. They get added to IOC's efffective price per mcf.
Look at Art's reaction to your explanation.
Have a good day.
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06-07-2013, 06:51 AM
(This post was last modified: 06-07-2013, 06:53 AM by Libtardius Maximus.)
This is getting interesting. A room full of accountants has reared it's ugly head.
Time to get some popcorn.
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I wouldn't really mind having no stake in the Exxon third train if this is temporary and we'll build our own plant in the Gulf pretty soon after, as in that case, the deal derisks, monetizes early, and provides funds for drilling and infrastructure.
However, if we're becoming just a gas supplier to Exxon for the foreseeable future, it's a bit of a different proposition. Better to sell LNG than gas in the ground, although even that depends on price, of course.
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Assoc- If you realize this then IOC knows this. LNG revenue was part of what was being sold. We are taking out best stab at where we are at. Thinking this is the final situation may be off the mark. Wait for the research reports to explain the deal. A combination of what been said can easily be spot on. I think Itnvest is close but needs finese. Thats my guess . We have zero sources named just message board posts.
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I will be the first to admit the information I have learned is simply the tip of the iceberg and there are many details to be discovered. They seem to be consistent with some press reports. It's goes without saying I'm not an IB nor involved in negotations. But I do feel extremely good about what little I have learned. And, I thought it important to pass along. This deal has evolved quite a bit over the last 2-4 years. It continues to evolve. I know some of these details are "different" versus some of your expectations. However, I am confident those who really do know what is going on feel very good about the deal structure. I also sense IOC wold like to have ownership in the 3rd train. But Exxon has partners who have contributed significantly to the infrastructure in place. These negotiations are complex and involve multiple parties.
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30% of LNG plus $5b paid over a few years would do the trick...value wise.
Hope the PNG LNG JVOA has tie back provisions to help facilitate commercial issues related to bringing in a new field..as has been mentioned a tariff or something would need to be paid for the shared infrastructure, jetti, etc..
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ltinvest,
One of the most informative, well thought out and logical posts I have read on the Exxon subject. Thank you, I appreciate it. This is the reason SHU was brought about.
