Citi on OSH: PNG LNG on track

[jft310]

If its $1 that $4.6 Billion for IOC , the Exxon pre-paids to be spread over all owners. Example Exxon will pay infrastructure costs those costs are absorbed by all owners from the proceeds. IOC shareholders to receive $2.7 Billion gross in the deal.

[Tree]

If its $1 that $4.6 Billion for IOC , the Exxon pre-paids to be spread over all owners. Example Exxon will pay infrastructure costs those costs are absorbed by all owners from the proceeds. IOC shareholders to receive $2.7 Billion gross in the deal.

In 2011, Marubeni paid ~$3/M for a 1% PNG LNG stake when they bought 20% of Merlin Petroleum project equity.  That buy-in price will translate to IOC.

[sydbod]

.... We now
see an emerging scenario where OSH (& STO) are offered a lower equity % in
Elk/Antelope to make room for an InterOil equity stake, a clear objective of InterOil’s
newly appointed CEO, Mike Hessian. .........

Now I start to be a believer that IOC may actually get a stake in PNG LNG.

Thanks for that Gator.

[Getitrt2]

IOC gets LNG participation this is not new, Hession didn't bring to the table this idea..IOC can pay for its equity LNG participation with additional NG. Citi has a very weak analyst that covers OSH.

Or, equity participation in PNG LNG could be part of IOC's delayed compensation for the portion of PRL 15 already agreed to be sold, the most likely, I would say.  However, I think there is a possibility of an even bigger deal than originally agreed to, perhaps in the form of a farm-in to another PRL or maybe even PPL 236.

[Palm]

Thanks Gator and Getit. This makes absolute sense when you look at how other LNG projects are structured. Entities such as a MLPs are used to hold partnerships which start out with the original partners. However, since exploration and expansion are very speculative partners agree to consider pullbacks/clawbacks when it's necessary to bring in a new partner. The operator (in this case XOM) has the duty of being sure any expansion is feasible and keeps other partners informed as necessary. Usually existing partners go along with the plan, especially in this case when the economics of PNG LNG are "greatly enhanced" by bringing in IOC's gas and/or liquids. All of this is being worked out between XOM and IOC as each knows what works for them.

OSH's risk in all of this of course is prospects such as P'nyang, Juha North, Kimu, SE Gobe, Barikewa, Uramu and Pandora are marked on their own "Requirements for LNG train growth in PNG" as "Non PNG LNG Gas Resources", then they have many others such as Flinders, Pasca B, Hides FW, Mananda Attice, Korka, Huria, Hedinia FW, Gobe Deep, Barikewa Deep, and some others which are marked as "Exploration Gas Resources". Any costs they have in drilling these are on them and drilling partners until/unless they are brought into an LNG project. They need to keep things looking as positive as possible to hit that magical $8.55 price by next March to keep things whole for PNG. The ideal would be that Woodside buys them out at $10-$13, but that is less likely when drilling has "moderate" expectations.

[trans]

A farm in agreement on license 236 would solve a lot of problems for everyone. A big jv, right by xom plant, and no objections from gulf people. works for me.