Duma: Gov approval should be easy and quick

[Palm]

I think maybe Duma git the last of the betel nut juice. He's changed his tune (?)

New gas deal lauded

Source:

The National, Wednesday December 11th, 2013

 By GYNNIE KERO

PAPUA New Guinea has welcomed additional investment by Total SA into the country’s growing gas industry, Petroleum and Energy Minister William Duma said.

Speaking at the signing of the exploration farm-in rights last Friday, Duma said the government had regarded the InterOil-Total deal a boost to the country’s LNG sector.

“The government would strongly support the introduction of a new multinational oil and gas entry into Papua New Guinea to assist with the development of Elk and Antelope and to further confirm that Papua New Guinea is well and truly open for new businesses, Duma said. 

“Strengthening competition of the LNG sector in this great resource-rich country is high in our government’s agenda.

“Since InterOil has introduced a world-class partner to ensure development of its discovered resource, it is our intention to encourage InterOil and assist it where possible in dealing with InterOil’s exploration licences.

“I have issued InterOil with petroleum retention licence 39 over the Triceratops discovery.

“This is another step on the path to proving up additional gas resources in the Gulf province”.

Duma said Total’s transaction would be subject to the normal government approval process, which should be relatively easy and quick.

Total SA said in a statement that its common objective and that of InterOil was to complete the delineation of the two discoveries and to continue to explore for new resources in the licence area.

Depending on the results, this could lead to a final investment decision by 2016 for the development of the fields and the construction of a liquefaction plant located onshore of Gulf.

In addition, Total had an option to take an interest in petroleum prospecting licences PPL 236, PPL 237 and PPL 238 in the same area.

“Following Total’s entry into exploration in Papua New Guinea in 2012, this new acquisition of an interest in significant discovered resources is an exciting opportunity for Total to develop a new gas production and liquefaction hub in the Asia-Pacific region, where gas demand is very dynamic,” Yves-Louis Darricarrère, president upstream at Total, said.

“Total will leverage its technology and experience in major LNG projects to reinforce its long-term production post-2020.”

“Total will pay US$470 million (K1.1 billion)  for a 42% interest (32.5% if the government executes its option to join the project) with a contingent payment estimated by Total at about US$590 million (K1.4 billion).

“The transaction remains subject to the approval of the government.

In October last year, Total acquired from Oil Search a 40% stake in the PPL 234 and PPL 244 offshore permits, 50% in the PRL 10 offshore permit and an option for 35% in the PPL 338 and PPL 339 onshore permits (in the same area as the Elk and Antelope gas fields and PPLs 236, PPL 237 and PPL 238).

In April 2012, Total Marketing & Services created a new affiliate in PNG, with offices in Port Moresby.

Total Marketing & Services had been dealing with  lubricants in the country via a distributor arrangement for several years.

[Putncalls]

SSOOOOOOOOO! Why do investors hate this SPA?

[Crippsfl]

SSOOOOOOOOO! Why do investors hate this SPA?

Because everyone thought it would be a deal with XOM with a relatively quick cash payout to IOC.  Instead, we got what could be considered a "better" deal with longer timelines.  No one wants to wait until 2015 and beyond. A lot of people had already banked that cash.

[admin]

Yes, against the negatives:
- Time (no Exxon, so longer wait for LNG plant)
- Somewhat disappointing deal metrics (in the first poll, I entered the option between $1-1.5/mcf)
- Some fudge about the size of the resource (although I think much of that is manufactured)

Stand the positives:
- Much of the economic and political uncertainty removed, the stock should be derisked to a considerable extent
- IOC has a clear path to monetization
- Cash shortage removed for a loooong time
- MUCH accelerated exploration in an area with many promising prospects
- Much bigger stake in LNG plant than we would likely have gotten in the Exxon plant.

Is this worth the epic sell-off? Dunno, don't think so. Asset prices have a habit of overshooting, and then undershooting..

[admin]

["Asset prices have a habit of overshooting, and then undershooting.. "]

And then overshooting again..

Obviously, we're not there yet.

[j4j]

["Asset prices have a habit of overshooting, and then undershooting.. "] And then overshooting again.. Obviously, we're not there yet.

i am not able to find a reason (excuse?) for today's shellacking. I am curious if anyone has one.

[TomCrooz]

["Asset prices have a habit of overshooting, and then undershooting.. "] And then overshooting again.. Obviously, we're not there yet.

i am not able to find a reason (excuse?) for today's shellacking. I am curious if anyone has one.

Maybe because it appears through this article that Total is once again estimating paying 1.6 billion for a 42% stake in E/A

[admin]

Part of it is disappointed investors, probably not all that much by the deal, but by the stock price action.

Part of it is the shorts piling on

And part of it is something I've touched on earlier, the different laws of IOC as a business, and IOC as a stock.

For the business, the deal is very good, but for the stock price, which moves on a much different time scale and dynamic, less so. These will align at some time again, for instance, when these wells start to spud Q1 next year.

[Brew Swillis]

"For the business, the deal is very good, but for the stock price, which moves on a much different time scale and dynamic, less so. These will align at some time again, for instance, when these wells start to spud Q1 next year."

Spot on.

[admin]

At times like this I even wonder why a company goes to all the trouble of having a listing. Whatever exactly happened in the PR intro of the deal and whoever is responsible for that, it must be terribly frustrating for management to see what they think is a very good business deal, securing a bright corporate future, being met by a rather epic sell-off and having to do a lot of explaining and/or hand holding.

The business deal is good. At $90, we were fairly priced, which led to people disappointed selling and short piling on, IMHO.

But lets simply look at the situation anew here. What happened, happened. We're at $55 or so, with a future much more secure, with a path to monetization, with big payments coming our way, and, perhaps most of all, with four, possibly five rigs starting to drill the living daylight out of some of these promising prospects..