Legal row looms for Oil Search as rival strikes deal

[ltinvest]

That is a good point Palm. If that means that OSH now owns all of the PAC interests in IOC's PPLs then why would they do anything to slow down future exploration?

Putn and Palm:  This seems to me to be a source of some confusion, because if OSH bought the Pac LNG Group Companies, why would they not now also own their interests in IOC's PRL 39 and PPLs, which apparently  they do not?  Per the OSH news release, "The Company has entered into a separate Heads of Agreement, to potentially acquire an interest in a number of other exploration licences, including the Triceratops gas discovery."  That's in the form of a six-month period of exclusive negotiations, with no prices yet agreed on.

Agree completely Getit; thought about that last night.  Botten stated that he bought entity/entities.  In the original SPA the PAC LNG Interests were defined as:

“PacLNG Interest” means, as at the Effective Date, an aggregate twenty two decimal eight three five percent (22.835%) interest in the PRL 15 Title and the JOA applicable to PRL 15 as at the date of this Agreement, which interest is held by the following entities:

(a)

PAC LNG Investments Limited (2.500%);

(b)

PAC LNG Assets Limited (6.750%);

©

PAC LNG International Limited (5.100%);

(d)

PAC LNG Overseas Limited (5.000%); and

(e)

PAC LNG Holdings Limited (3.485%).

If these entities only owned interests in PRL 15 it makes more sense.  But these interests were likely in the original PPLs out of which PRL 15 was carved.  That's where some of this falls away for me.

Done with this; going to let it unfold because I think IOC has this coverered by how the final deal was structured.

excellent conclusion

[jft310]

Nada here
Drill baby drill

[sydbod]

..........

OSH purchased "Pac LNG". OSH did not purchase equity in PRL15. "Pac LNG" still owns its equity  in PRL15 and therefore maintains its pre-emption rights.

IOC on the other hand moved some of its equity from itself to one of its created holding company. While ever IOC holds that holding company, it can be argued that this moved equity is still within IOC (so does not trigger pre-emption rights) , but once this holding company is sold to Total, then the equity has been moved effectively from IOC to Total. This is completely different to what OSH did. I suspect it is also not legal as it is a contrivance to try to bypass one of the conditions within the original and still current contract between "Pac LNG" and IOC.

Also, it is not OSH that is trying to enforce its pre-emption rights, it is "Pac LNG" that will be trying to enforce its pre-emption rights.

This situation will not go away until some judge rules on it, or until some understanding is reached between all the parties.

Here it is:

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01504772

PRL 15 Notice of Dispute
28 March 2014
Oil Search advises that it has, via the Pacific LNG Group Companies that were acquired by the Company on
12 March 2014, issued a notice of dispute to an InterOil Corporation entity (SPI (208) Limited) pursuant to
the Elk/Antelope PRL 15 Joint Venture Operating Agreement.
The dispute relates to the transaction announced by InterOil on 26 March 2014 whereby SPI (208) Limited
purports to have assigned an interest in the Elk/Antelope Project Area PRL 15 to Total Holdings International
B.V.
PETER BOTTEN, CBE
Managing Director

[Palm]

Palm, I can't believe that you buy what MR Chambers is selling? OSH thwarted the IOC/TOT deal? OSH can use it's pre-emptive rights to give a piece of E/A to Total? Botten is quoted so MR Cambers must be correct? Let us look at the fallacious quote: "This deal is an enactment of what InterOil announced in December," Mr Botten said. Of course it's a re-enactment! Total wanted a 40 percent stake and got a 40% stake. This article does increase my respect of certain hedge funds. It's better than an avi post on Yazoo. But?

Doesnt matter whether or not I believe it Puts, but it's hard to believe that there's nothing to it when there are rumors out that OSH actually filed an injunction. Again, let's see what comes out tomorrow. But something is going on. BOTH Hession and Botten are quoted and seem to be speaking to a conflict of some sort. To think that there is nothing to it is bit of sticking your head in the sand. Could be minor and nothing or could be something to deal with. But we don't know enough yet. I'm certainly not going to ignore it. Again, better to be aware than be in denial.

It's also a bit naive to think OSH came into this wanting to hold hands and be friends. Too many signs point elsewhere.

These 3 pending articles on SA likely will be out in the next couple of days or by coincidence on Monday or Tuesday. So do I believe the shorts have another coordinated plan in place? Crickets by main players to that on Yazoo today usually means something is coming. I'm sure it won't be congratulating IOC and admitting they were wrong.

Please expand on the highlighted points above. What signs are you talking about?   In this business what goes around, comes around.  OSH has Total as a partner on much of its other PNG leases where OSH is operating.  Total made some very nice statements (much nicer than anything they said about IOC) when OSH made their buyout announcement.  I think if they jack around Total on this deal, they will get payback in various subtle ways later that they might not like. 

We already have assurances by IOC and Total that they will monetize this gas ...“ as quickly as possible, through the fast-growing Asian market." I feel certain that 2020 is not "quickly as possible."  I think this is a strong hint that something will work out with XOM to achieve this objective.  The hope of exporting gas in 2020 is not appealing and seems more along the lines of "as slow as possible.".  I'm sure Hession wants something earlier.  So what would OSH have to gain by suing?  Seems very foolish and doesn't fit the picture of the announcements to date.  If an equitable deal can be worked out, the best economic answer for all is to signficantly expand PNG LNG (XOM) and then build the 2nd plant if IOC discover many more TCF.  Someone said there was space for 8 trains in all.  And right now they're working only on finding gas for train 3. 

Best regards,

Kaliboo

OSH's action tonight is the culmination of what I was talking about. I think this shows

1. That by buying the PAC LNG interests the way they did and saying the reason they "paid up" more than what Total paid IOC was because they acquired preemptive rights and would allow them to influence how PRL 15 is developed

2. That by Toeing the government line by stating they will be looking at both expansion and standalone

3. That by stating publicly last night that they still have preemptive rights after IOC and Total closed their deal

These are a few of the signs I was talking about.

[Kaliboo]

Palm, I can't believe that you buy what MR Chambers is selling? OSH thwarted the IOC/TOT deal? OSH can use it's pre-emptive rights to give a piece of E/A to Total? Botten is quoted so MR Cambers must be correct? Let us look at the fallacious quote: "This deal is an enactment of what InterOil announced in December," Mr Botten said. Of course it's a re-enactment! Total wanted a 40 percent stake and got a 40% stake. This article does increase my respect of certain hedge funds. It's better than an avi post on Yazoo. But?

Doesnt matter whether or not I believe it Puts, but it's hard to believe that there's nothing to it when there are rumors out that OSH actually filed an injunction. Again, let's see what comes out tomorrow. But something is going on. BOTH Hession and Botten are quoted and seem to be speaking to a conflict of some sort. To think that there is nothing to it is bit of sticking your head in the sand. Could be minor and nothing or could be something to deal with. But we don't know enough yet. I'm certainly not going to ignore it. Again, better to be aware than be in denial.

It's also a bit naive to think OSH came into this wanting to hold hands and be friends. Too many signs point elsewhere.

These 3 pending articles on SA likely will be out in the next couple of days or by coincidence on Monday or Tuesday. So do I believe the shorts have another coordinated plan in place? Crickets by main players to that on Yazoo today usually means something is coming. I'm sure it won't be congratulating IOC and admitting they were wrong.

Please expand on the highlighted points above. What signs are you talking about?   In this business what goes around, comes around.  OSH has Total as a partner on much of its other PNG leases where OSH is operating.  Total made some very nice statements (much nicer than anything they said about IOC) when OSH made their buyout announcement.  I think if they jack around Total on this deal, they will get payback in various subtle ways later that they might not like. 

We already have assurances by IOC and Total that they will monetize this gas ...“ as quickly as possible, through the fast-growing Asian market." I feel certain that 2020 is not "quickly as possible."  I think this is a strong hint that something will work out with XOM to achieve this objective.  The hope of exporting gas in 2020 is not appealing and seems more along the lines of "as slow as possible.".  I'm sure Hession wants something earlier.  So what would OSH have to gain by suing?  Seems very foolish and doesn't fit the picture of the announcements to date.  If an equitable deal can be worked out, the best economic answer for all is to signficantly expand PNG LNG (XOM) and then build the 2nd plant if IOC discover many more TCF.  Someone said there was space for 8 trains in all.  And right now they're working only on finding gas for train 3. 

Best regards,

Kaliboo

OSH's action tonight is the culmination of what I was talking about. I think this shows

1. That by buying the PAC LNG interests the way they did and saying the reason they "paid up" more than what Total paid IOC was because they acquired preemptive rights and would allow them to influence how PRL 15 is developed

2. That by Toeing the government line by stating they will be looking at both expansion and standalone

3. That by stating publicly last night that they still have preemptive rights after IOC and Total closed their deal

These are a few of the signs I was talking about.

Thanks.  My views have shifted towards your thinking thanks to another posting I read.  You may see my comments elswhere tonight.  I now view OSH as the de factor PNG national oil company.  The government may be driving this.  In any case I'm expecting OSH to get something out of this they wouldn't have gotten otherwise.  They are the favored company.  We are on highly uncertain turf.  The only good thing left is the government has an incentive to see this settled quickly (we hope).  The lesson for IOC is to be extremely careful in monetizing any other gas.  OSH probably would not be my choice in the future.  They've already worn out their welcome.

[Palm]

Palm, I can't believe that you buy what MR Chambers is selling? OSH thwarted the IOC/TOT deal? OSH can use it's pre-emptive rights to give a piece of E/A to Total? Botten is quoted so MR Cambers must be correct? Let us look at the fallacious quote: "This deal is an enactment of what InterOil announced in December," Mr Botten said. Of course it's a re-enactment! Total wanted a 40 percent stake and got a 40% stake. This article does increase my respect of certain hedge funds. It's better than an avi post on Yazoo. But?

Doesnt matter whether or not I believe it Puts, but it's hard to believe that there's nothing to it when there are rumors out that OSH actually filed an injunction. Again, let's see what comes out tomorrow. But something is going on. BOTH Hession and Botten are quoted and seem to be speaking to a conflict of some sort. To think that there is nothing to it is bit of sticking your head in the sand. Could be minor and nothing or could be something to deal with. But we don't know enough yet. I'm certainly not going to ignore it. Again, better to be aware than be in denial.

It's also a bit naive to think OSH came into this wanting to hold hands and be friends. Too many signs point elsewhere.

These 3 pending articles on SA likely will be out in the next couple of days or by coincidence on Monday or Tuesday. So do I believe the shorts have another coordinated plan in place? Crickets by main players to that on Yazoo today usually means something is coming. I'm sure it won't be congratulating IOC and admitting they were wrong.

Please expand on the highlighted points above. What signs are you talking about?   In this business what goes around, comes around.  OSH has Total as a partner on much of its other PNG leases where OSH is operating.  Total made some very nice statements (much nicer than anything they said about IOC) when OSH made their buyout announcement.  I think if they jack around Total on this deal, they will get payback in various subtle ways later that they might not like. 

We already have assurances by IOC and Total that they will monetize this gas ...“ as quickly as possible, through the fast-growing Asian market." I feel certain that 2020 is not "quickly as possible."  I think this is a strong hint that something will work out with XOM to achieve this objective.  The hope of exporting gas in 2020 is not appealing and seems more along the lines of "as slow as possible.".  I'm sure Hession wants something earlier.  So what would OSH have to gain by suing?  Seems very foolish and doesn't fit the picture of the announcements to date.  If an equitable deal can be worked out, the best economic answer for all is to signficantly expand PNG LNG (XOM) and then build the 2nd plant if IOC discover many more TCF.  Someone said there was space for 8 trains in all.  And right now they're working only on finding gas for train 3. 

Best regards,

Kaliboo

OSH's action tonight is the culmination of what I was talking about. I think this shows

1. That by buying the PAC LNG interests the way they did and saying the reason they "paid up" more than what Total paid IOC was because they acquired preemptive rights and would allow them to influence how PRL 15 is developed

2. That by Toeing the government line by stating they will be looking at both expansion and standalone

3. That by stating publicly last night that they still have preemptive rights after IOC and Total closed their deal

These are a few of the signs I was talking about.

Thanks.  My views have shifted towards your thinking thanks to another posting I read.  You may see my comments elswhere tonight.  I now view OSH as the de factor PNG national oil company.  The government may be driving this.  In any case I'm expecting OSH to get something out of this they wouldn't have gotten otherwise.  They are the favored company.  We are on highly uncertain turf.  The only good thing left is the government has an incentive to see this settled quickly (we hope).  The lesson for IOC is to be extremely careful in monetizing any other gas.  OSH probably would not be my choice in the future.  They've already worn out their welcome.

But again, the government just renewed our licenses at 100% and granted PRL 39. That was done at the same time the Total deal was announced in December. That says something very strong for IOC. Unless of course Hession faked out the government and said the deal would be with Exxon, got the licenses and then did the deal with Total. Hohoho, but I don't think that happened. This is about having strong influence on where the gas goes. Seems this can be worked out like we said last night; prove up enough gas for everyone.

[cybersssss]

In several months we went from propane tanks to stranded gas to an spa to a legal fight over ioc's assets. Seems like there is a heck of a lot worth fighting for. Wildly bullish right now.

[Palm]

Couldn't agree more. Fresh licenses in hand and super majors fighting over what we gots. If this looks like it's going IOC's way, this could be when Exxon comes knocking. Think about all of the things leading up to this; especially Duma no longer in his seat. I know the ICCC recently stated a concern with OSH coming in and that could shove gas to PNG LNG first and they saw that as anti-competitive, but it doesn't mean they won't give it the old college try.

[cybersssss]

Agreed palm. If confusion over thus development drops us tomorrow I will take it as a huge opportunity foe me.