OSH announcement of Papua LNG; a bit better

[sageo]

"I don't think any appraisal work or any Total study and planning work will be frozen in place waiting for some government "pomp". " Who said that it is? Whole different thing having government approve initial concept and appoint Total as Operator and continuing operations.

Guys- Good discussion . As usual,am always learning . OT ...just placed order to buy more at 51.28 (I know ,rocks in my head) ! These continual "buying opportunities" just freak me out. Probably should have waited,but we shall see.

[sageo]

"I don't think any appraisal work or any Total study and planning work will be frozen in place waiting for some government "pomp". " Who said that it is? Whole different thing having government approve initial concept and appoint Total as Operator and continuing operations.

Guys- Good discussion . As usual,am always learning . OT ...just placed order to buy more at 51.28 (I know ,rocks in my head) ! These continual "buying opportunities" just freak me out. Probably should have waited,but we shall see.

Well as we can see "the early bird (didn't) catch the worm" .....the bird (me) got bitten ! Ha,ha.[maybe 40s are realistic as someone recently said .]

[Getitrt2]

"I don't think any appraisal work or any Total study and planning work will be frozen in place waiting for some government "pomp". " Who said that it is? Whole different thing having government approve initial concept and appoint Total as Operator and continuing operations.

YOU said, "Some pomp to take place before things can proceed.".

[Palm]

YOU need to read and re-read. The point was being made about OPERATORSHIP and initial concept APPROVAL.

[Getitrt2]

Much of what I said was responding to Art, as well, who said "well over a year past" on appraisal. I can "read", but I guess we all could to be clearer and more specific at times.

Good luck to all here, and GO TO HELL, bonk, now bashing and distorting on Yazoo again.

[ArtM72]

What is your basis for saying, "we will be well over a year past the time when we should have gotten appraisal based payment"? I don't think basically any companies would be publicizing all the details you are asking about and complaining about not knowing, as much as I would also like to know more. I don't think any appraisal work or any Total study and planning work will be frozen in place waiting for some government "pomp".

My basis for projecting the year late appraisal payment might be a little thin but here it is:

Back in November the 3Q14 CC presentation states the appraisal payment would happen 2H15.  As of now we know the rig doing the sidetrack at A4 is still being mobilized.  Following the sidetrack that rig will have to be demobilized and moved to A6.  That puts best case timing for certification in 1Q16. Then there is the discussion about A7. The decision to drill A7 appears based upon the results of A4 and A6 and/or the flow testing to be carried out the rest of the year centered around A5.  Spudding of A7 in 1Q16 pushes the resource payment back to 2H16.

Now, can IOC move things along faster?  Moving one of the new heli rigs to drill A6 would certainly help but that is not the chosen plan.  Dropping A7 would give us a better shot at a 1H16 payment but since production wells have to be drilled anyway calling A7 an appraisal well serves any interest there might be in delaying the payout.  As far as foot dragging on the actual project is concerned it seems pretty clear since we can have no development plan until the new resource estimate comes in to size the facility we won't have government buy-in either. If this was a real go-go project drilling A6 wouldn't be held up waiting for completion of the A4 sidetrack.

I believe it is safe to say we were all pretty surprised to find "concept selection" only amounted to a site selection that had yet to fully muster political support.  No doubt in my mind our fall from 60 is due to profit taking by those who have come to expect every few steps forward by IOC inevitably are accompanied by a couple of steps back.

[Palm]

According to the SPA the Buyer (Total) makes the call for Certification. If they decide to drill Ant 7, any result could/would be included in a later certification. The fact that they have the enhanced seismics might help the certifiers bump their estimates and if/when Ant 7 is drilled and it proves out much more assets, the Wildcard/Final Certification would pick that up and IOC would get its additional payment.

The main thing now is getting all parties to the point where they feel they will certify enough for the 2-train startup. It's gravy beyond that, especially if Wahoo hits.

[Thylacine-2]

Palm, Pet is the right kind of engineer to comment on this, but my understanding is that the Wildcard/Final Certification can be calculated from the amount of gas that has been produced by then and the resulting pressure drop in the reservoir.

[Palm]

Thy, not quite right. The production language only comes in Sec. 3.5 (a) i and ii where it mentions that one of the criteria for calling for Recertification is from First LNG Cargo to 60 days after the last day of the calendar month where 25% of PRL 15 2C resources based on the initial Certification is produced.

All Certification/Wildcard/Final resource payments are based on the estimated volume of resources per the chosen Experts. Then for the Wildcard/Final estimate any produced hydrocarbons are added to the average of the 2 Expert estimates of the remaining PRL 15 resources.

[MartiniStocks9756]

What are the chances that IOC makes it to that point of recertification? That is a long way from today. Many hurdles and more ups and downs between now and then. But would assume the pps would be much higher than today.