Summary Analysis of UBS report of 27 May 2015 + Comments

[jft310]

Total in the past sells out all deliveries does not use the spot market . In this LNG market makes sense to do that again

[Palm]

Thanks for the great analysis Pet. Will be interesting to see what Total does from here. I agree that as new Operator Total may pursue the other prospects within PRL 15; for them it makes the most economic sense and that rules. Also I think I saw in OSH's recent presentation that they state Ant 6 drilling is "subject to JV approval". Might the other prospects now be more "important" than more EA drilling after Ant 4 completion?

Also Stavros:

"An aside: Our old friend "Denintex" popped up on the "Other IOC Message Board" three hours ago and posted the following:

THREAD: "The Final Solution"

"Looking more and more like IOC will be bought by Total in the 5.3 to 5.75b range before mid-2nd Q 16.

You heard it first here."

That is a fake Denintext I believe like many names being used on Yazoo. I have seen others like iluvioc being faked and people there thinking it's the real iluv. Usually a quick review of history of posts reveals this quickly. Lots of one sentence or very short posts.

[sageo]

Pet - As always, many thanks for your high-quality work ( and even more thanks for sharing this work and knowledge with us ). Makes 2016 look better and better......the LONG wait could get a little easier. Best to you and yours.

[sageo]

You wax and wane between highly optimistic and overly pessimistic Putz. Did your Alma Mater lose today? Mine lost by giving up 17 points in the 4th quarter while scoring ZERO! But I still feel good about IOC's prospects in the next 12 months. Certification payment from TOTAL will be mid-2016 FID will be in 2017 (as I said, less than 12 months after Certification Payment is made) Startup is currently planned for 2022 according to the current schedule THAT's 7 YEARS FROM NOW! When the current worldwide recession is over, energy demand growth will revert back to normal and oil price will recover very quickly due to reduced oil supply growth. ==== I know, I know ... all you folks think the world is in great shape but I assure you it's not. I travel on business worldwide and deal with major corporations in my day-to-day activities, and things are bad everywhere other than in the good ol' USA ==== TOTAL claims they currently own 12 million tons per annum of LNG production capacity but they really don't because Balhaf is shut down. TOTAL stated in their Investor's Day Presentation that they intend to have 20 million tons per annum of LNG production capacity by 2020. They want to stay in a leadership position in LNG and increase sales relative to their Oil business They have Ichthys and Yamal LNG under construction; that won't be enough, especially since they can't get financing for Yamal. Nigeria Train 7 would give them additional 1 million tpa, but it's been delayed for 10 years already ... it's not likely to proceed in my mind. TOTAL needs Papua LNG ... probably sooner than 2022. That's why, all of a sudden (and to my pleasant surprise), TOTAL highlighted/stressed Papua LNG repeatedly in their Investor's Day Meeting last week.

Stavros - Loved your paragraph begining with " ==== I know,I know " . I don't have your traveling around the world knowledge , but  I have been telling the g-kids for the past decade or so they will have to study hard,work hard and save hard in order to stay ahead of things to come . I tell them to always be vigilant....all is not well in "la,la land". Thanks very much for all your help in seeking a good outcome for our investment in IOC.

[jft310]

Agree the Denintex on yahoo is not the "real" Denintex. Sorry to say . Hession thinks at production start that Interoil is worth $10 Billion plus . From the last week road show . No reason to sell out cheap not to say we don't get offers .

[ArtM72]

Thanks. I like to see different points of view if I can.

Differing views certainly enrich this board.

Reading this thread brings back to mind the suggestion that OSH is now also very much interested in having high numbers certified and Papua LNG moving forward.  So while TOT may certainly have reason to drag given the financial impact of that first 10 TCF OSH certainly does not if it is on the market.  When you add OSH and IOC votes pushing the project forward you have a ruling majority both intent on getting the appraisals done ASAP.

Lots of money on the table here.

[Palm]

Just a comment on Ant 6 from the Sept 15 presentation; on slide 16 they are discussing their appraisal program and show Ant 6 with a "*" then at bottom left it says "Subject to JV approval". However back on Slide 12 they state, "Antelope 6 site preparation on eastern flank well advanced, expected to spud 4Q15, complete by December 2015."

My guess is slide 16 is an older slide and Slide 12 reflects the current status of Ant 6.

[Putncalls]

If their wasn't going to be an A6 how could the certification be delayed until 2Q or mid 2016? How could the site preparation be funded without JV approval? Wouldn't a finished appraisal program be in the best interest of IOC AND OSH?

[jft310]

"Further testing is to be done when Antelope-4 ST-1 is completed. I expect these tests to prove that Antelope-1, Antelope-4 and Antelope-5 are all connected. GLJ originally used a discount factor of 0.80 for continuity uncertainty. I don’t know what they are using most recently but these tests should just about eliminate this discount factor and increase their sales gas resource number."

This may be the best part of PET's post . By Proving connectivity that adds it looks like 20 percent to GLJ before including Ant 4 and 5 drilling results . I think I am reading the .80 number correctly ?
The mid case becomes the high case based on the connectivity tests .

[MRP]

JFT,

It actually adds 25% (.20/.80). This uncertainty factor was only applied to the dolomite so not all of the resource but a big portion of it.

Of course there are a number of factors that will be updated. Some moving up and some down but it seems like the information evolution has been largely in the positive direction thus far.

The recovery factor will be a meaningful variable. It will be interesting to see if the flow tests were sufficient to establish that it is a depletion drive reservoir and what ultimate recovery rate (abandonment pressure) will be used at p50. The Arun analog points to higher than the 80% that UBS was previously using.