Oil Search update PRL15

[jft310]

Get it they as in Hession stated to drill another well an Ant 7 would have to add a T , he even quantified it as $400 million in payments plus $2-300 million in future LNG prices . Or significant !!

[Palm]

What I find interesting in all this (and perhaps has been lost by the stock price), is that not only does Interoil have the present EA resources to complete a 2 train project, but that between Triceratops, further delineation of Ant 7, Ant South and potentially a very large Raptor, there is significant tie back potential to greatly expand Papua LNG trains once the plant is complete.  These kinds of additional resources are exactly what Exxon and OSH had envisioned being available to expand PNG LNG, but of course aren't.  Of course we are all looking what's on the windshield (engergy prices, Ant 4, 6 and recertification), but we should all keep this in mind, albeit down the road, but it does impact valuation for an acquirer.  .

Agree good Doctor and I find it very ironic how Botten is talking out of both sides of his cranium. When talking about OSH operations he mentions how they are driving down cost in this oil price slump (much as IOC has said), that it is (as hard as it is for him to say it) likely that there is a duplicate PNG LNG with what they now have at EA, that Ant S has great upside, etc. etc. and that even at these depressed prices Papua LNG will offer superior IRR, but then pukes down his front and says, "Uh, but we aren't sure we can commit to both a PNG LNG expansion and Papua LNG in 2017."

As Relker says, it sounds like OSH is putting its share (or at least part of it) of PRL 15 on the auction block.

[davidhmtk]

Disagree.  Botten would be talking up the "Wortld-class field" if he were selling.  He is doing his best to throw cold water on the value of IOC's major asset.  He is buying, or thinking of it.

[admin]

What I find interesting in all this (and perhaps has been lost by the stock price), is that not only does Interoil have the present EA resources to complete a 2 train project, but that between Triceratops, further delineation of Ant 7, Ant South and potentially a very large Raptor, there is significant tie back potential to greatly expand Papua LNG trains once the plant is complete.  These kinds of additional resources are exactly what Exxon and OSH had envisioned being available to expand PNG LNG, but of course aren't.  Of course we are all looking what's on the windshield (engergy prices, Ant 4, 6 and recertification), but we should all keep this in mind, albeit down the road, but it does impact valuation for an acquirer.  .

Yes, quite. And now might also be a goot time to remember that:

• The present oil price is near irrelevant for IOC's business
• By the time they are producing it's likely to be a lot higher, given the reductions in capex around the world
• Many energy stocks have been sold off also because of their precarious balance sheets, IOC isn't anywhere near that league.

There is considerable value here, but nobody is in a hurry to buy

[Palm]

Disagree David.  In the presentation OSH does talk up the quality of EA and Ant S as being great assets.

"Results of appraisal programme to date have been at upper end of OSH’s expectations" Had been saying they were as expected

"‒ Antelope 4 extended good quality reservoir to south ‒ Antelope 5 testing confirmed substantial resource base, excellent reservoir quality and deliverability and pressure communication between A5 and A1"

"Potential Train 3 at PNG LNG and Papua LNG 1 or 2 train options highly competitive with global LNG project alternatives"

"Potential PNG LNG Project expansion and Papua LNG Project globally very competitive, with attractive returns even under revised oil price scenario"

"Gulf area, on trend with Elk-Antelope field, highly prospective and under-explored Miocene play: – AntelopeSouthexplorationwell– PRL 15 (OSH 22.8%). Adjacent to and downdip from Antelope. Large upside potential"

Slide 35 shows a pretty impressive seismic shot of Ant S

More pumping than OSH has ever done.

[Palm]

Another concern for OSH is the debt load for PNG LNG. They owe $4.3 billion and are having to service this debt with disclosed lower prices (state 85% of sales of LNG were spot). That debt doesn't get lowered by anything but required payments. In their 2014 full-year results they state that full debt payments will be $5.9 billion and this is payable over 11.5 years. Pretty heavy load.

They will (and are doing) do what they need to make sure those payments are made, but it's understandable why he chokes when trying to answer the question about doing both at the same time. They are cutting costs but $5.9 billion over 11.5 years comes to just over $.5 billion/yr in cash. And that's just getting started.

[Putncalls]

I think oil prices will be some where in the 70 range by that time though?

[Palm]

Right now, expecting $70 oil by Certification is a real stretch. If you are thinking by 2017 and FID it's a better bet.

[jft310]

Michael Lynn states the named reservoir engineers by Oil Search are for their deal with PACLNG . The Total/IOC reservoir engineers have not been named yet .

[sageo]

Disagree David.  In the presentation OSH does talk up the quality of EA and Ant S as being great assets.

"Results of appraisal programme to date have been at upper end of OSH’s expectations" Had been saying they were as expected

"‒ Antelope 4 extended good quality reservoir to south ‒ Antelope 5 testing confirmed substantial resource base, excellent reservoir quality and deliverability and pressure communication between A5 and A1"

"Potential Train 3 at PNG LNG and Papua LNG 1 or 2 train options highly competitive with global LNG project alternatives"

"Potential PNG LNG Project expansion and Papua LNG Project globally very competitive, with attractive returns even under revised oil price scenario"

"Gulf area, on trend with Elk-Antelope field, highly prospective and under-explored Miocene play: – AntelopeSouthexplorationwell– PRL 15 (OSH 22.8%). Adjacent to and downdip from Antelope. Large upside potential"

Slide 35 shows a pretty impressive seismic shot of Ant S

More pumping than OSH has ever done.

Palm -Thanks for your reference to slide 35 . Had overlooked that earlier.... ( printing it off for my 'bulging' IOC file) . Good stuff !  Shows the reservoir limits to the sw and se with those two faults and then shows upper smaller fault in the formation . Nice that we have a carry....at that depth pressures should well exceed those of the original Antelope at 3600 psi . Wonder what rig Total will choose for Ant South ??? .My best to you in our long journey .