SELL?!? That's NUTS!

[Putncalls]

1. IOC has odles of doe

2. IOC needs a measly 5 or 6 more Ts for train 3 and 4

3. The major shareloders are few and smart.

Who's selling?

[will2bgreat]

Putncalls,

I'm all for selling a portion of IOC's gas to Exxon; say 4Ts out of Wahoo/A-South.  If they could get the cash upfront, IOC could use this money to fund a portion of their LNG plant.

Good luck longs.

[jft310]

The only problem with Exxon will be we will insist on LNG participation which makes it harder . Can't see why Total can't help get this done ...not a gimme .

[Palm]

P'nyang is now the key to Exxon needing to play fair. The gov has made it's desires known for expansion of PNG LNG and for 2nd LNG project. They eventually want both projects "maxed" with everyone saying there's plenty of gas to go around.

IOC again pointed out that it has plenty of funding to last them though Certification and P'nyang will be drilled well before then. "Synergies" will be clear then as MH said in the CC.

[Getitrt2]

IOC normally only talks about "synergies" with PNG LNG when asked about it, as in this conference call, and then does not use the term "expansion" in reference to PNG LNG; and I think there are good reasons for that. Some terms I have heard from them or others are synergies related to infrastructure of various types, manpower and training, experience and capacities of the PNG government, environmental issues and tasks, etc. I feel sure IOC would never refuse to discuss such synergies with potential benefit or with anyone who so wanted to do so. Of course, some of them would probably be relevant only if they select a location near PNG LNG, and the location selection is not final.

I assume my long-time position and opinion on what I considered the really negligible likelihood of any PRL 15 gas being used anytime for expansion of PNG LNG is well known, and I've discussed reasons in some detail in the past year or more. Although they certainly have every right to do so, I guess I've gotten so tired of the continuous/repeated arguments by some in support of the logic for and likelihood of using some PRL 15 gas for expansion of PNG LNG, I decided to go directly to IOC management on the subject and see what I got if anything. What I am hearing from IOC is that they fully intend to use ALL gas from PRL 15 for multiple trains at the Antelope LNG project, and NONE for PNG LNG expansion, although I assume that answer was addressing those options and would not necessarily preclude some relatively small amounts of gas going for PNG power purposes. It was also pointed out that working out/negotiating some deal for the other option would be extremely complex and involve extensive management and legal attention, work, and time, for multiple companies, of course, and would likely delay the whole project, which is one of the last things IOC, Total, or the government would want. That's also one of the concerns I mentioned long ago. I am still not going to say it is a complete impossibility, but it sounds pretty close to that to me. That, of course, does not preclude deals on IOC gas from elsewhere for whichever train or trains. I feel sure Exxon and OSH are going to pursue gas options at P'nyang and other prospects, as they have said, before pursuing others, and they are experts at aggregating gas and dealing with high costs.

I would certainly be interested in anything different anyone hears from IOC, but I am hopeful this is the last time I'll be inclined to say much of anything on this subject.

[jft310]

One arguement to support your position is Exxon wants a majority position and in PRL -15 that would mean someone selling part of their interest to Exxon . Since this appears this is one of the least costly projects to develop in the world then anyone selling their position would want a premium for any selling of part of their interest.
Exxon didn't become Exxon paying premiums to others especially when their may be cheap properties for sale in the U.S. Exxon has choices and they are very bottom line oriented and will not pay premiums when bargains are available.
The drop in oil prices has made this the case. If oil prices had not dropped as they have then another outcome could easily be in the cards but today oil remains weak and bargains are just starting to appear in the U.S.

[Palm]

I wouldn't keep mentioning it if I hadn't had other indications over time. It all depends on what gets proven up when. The comments by MH in this CC are not the first he's mentioned of discussions with Exxon. The door always remains ajar. Long way to go with all of the drilling by both parties.

Seems the deal in Dec 2013 was most certain to be with Exxon. Nothing is certain this early in the game.

[jft310]

P'nang??as regards OSH what's their exploration record?..?Hides Deep zip, off shore well nothing but water . Etc . Is the new level of Interoil disclosure meant to attract high bids in a new farm agreement?Sweet to share those drilling costs if IOC but especially more so if you are Exxon partnered with OSH and paying drilling costs for multiple water wells .
YA see they have this partially used pipeline and it needs gas . Most logical is Wahoo of course but concept selection is down to 3 not 1 and we don't know the details of the 3 and Hession stated Tuesday they talk to Exxon .
I don't think it's nailed down yet and closed doors make zero sense with billions on the line .

[ArtM72]

The strongest motivating influence might be a government desire to expand capacity at the fastest pace practicable. IF sufficient gas exists for more than three trains simultaneous construction on two sites would appear to provide the solution. Given the timing of exploration and construction we might be seeing that sooner than later.

[CAC]

The strongest motivating influence might be a government desire to expand capacity at the fastest pace practicable. IF sufficient gas exists for more than three trains simultaneous construction on two sites would appear to provide the solution. Given the timing of exploration and construction we might be seeing that sooner than later.

*******

Unless XOM buys IOC outright I'm not sure they ever see any of IOC's gas.  IOC can make money selling the gas...and can make even more processing the gas.  There is obviously a very large "barrier to entry" into the processing business (the plants require a supermajor partner and about 18 billion dollars) which has given XOm an advantage so far.  But once IOC gets over that hurdle, I see no reason they wouldn't want all of their gas to be processed in the place they own "processing equity".  If there ends up being enough gas for 1) two trains with TOT and 2) some to be sold to XOM for their third train...why wouldn't IOC/TOT just build three trains themselves?