The long term picture

[Kaliboo]

I may have missed it but I have not seen any comments on the long term impacts of the Total SPA vs what an XOM deal might have delivered.  Everyone is focused on the current upset for good reason and I am too.  But the XOM deal would not have been a good thing if you believe IOC has more to come.  To maximize value for IOC we need 2 or more lng plants accessible to our assets to provide price competition on the gas.  And we'll own 30% of our plant.   Because we won't own any of the XOM plant, they will have to bid up the price for our gas to make it worth our while, if they need/want more gas. So it's good to have potential options.  Also the XOM plant gives us a lever in future deals with TOT or any other SMs.  MH is setting up a nice future dynamic for the benefit of IOC.  But we may never see it.  As we further derisk E/A and Trice as well as potentially add new discoveries all in 2014,  the temptation for multiple companies to buy IOC may be overwhelming.  In 18 months this IOC forum could be history due to tremendous success.  We all thought that day had arrived.  The bait is not quite juicy enough for the Mother of All Deals...yet.  2014 should fix that.  So it sucks for the moment but I can hold on for the mega deal while keeping my eyes on the rigs and the announcements that are coming.  It seems 1 year, 2 at most.  The more we derisk and discover, largely at Totals expense, the more valuable we become.  But I speculate.

[admin]

Well, we don't know exactly what the Exxon deal would have delivered, but I have to say I'm a little surprised at the outcome. I would have thought that the economics (and time) of a third train at Exxon would have given them a considerable leg up in the negotiations.

But I've also said several times that these negotiations have a habit of moving according to their own dynamics. I have a feeling the large stake in the LNG plant is the most important factor that swayed it for IOC, or perhaps there was something in the Exxon deal that they didn't like, perhaps a complication with the existing partners, or just a better feel with Total. But I speculate as well

And it isn't terribly important anymore, unless the losers from the bidding won't take no for an answer. And they can indeed sit back for a while and let the drilling derisk further. One or two new significant finds, which is well within the realm of possibilities (albeit by no means a given), well, one would really think that IOC would become a very attractive take-over candidate.

[Relker]

According to the Project Agreement with PNG IOC committed itself to set up a new LNG plant with a major. PNG was not happy with the XOM-deal and O' Neill and Duma played good guy/bad. With all concessions elapsing in 2014 and a 180 day ultimatum IOC choose for a safe roadmap together with Total.

Now the deal is written in stone, there is no obstacle to start with the CSP-plant and build a tie-in to the XOM pipeline which is not maxed out. This will guarantee feedstock supply for XOM's third train between 2016 and 2020. I am sure XOM is willing to pay a good price for this.

[jft310]

According to the Project Agreement with PNG IOC committed itself to set up a new LNG plant with a major. PNG was not happy with the XOM-deal and O' Neill and Duma played good guy/bad. With all concessions elapsing in 2014 and a 180 day ultimatum IOC choose for a safe roadmap together with Total. Now the deal is written in stone, there is no obstacle to start with the CSP-plant and build a tie-in to the XOM pipeline which is not maxed out. This will guarantee feedstock supply for XOM's third train between 2016 and 2020. I am sure XOM is willing to pay a good price for this.

Relker is spot on