A7

[sageo]

Pet - Hi . Some how I missed your post yesterday at 2:07 pm. (...you hit another ONE during your time at bat). I find the DST #14 very,VERY interesting . With the g/w contact being used up until now at 2214 meters, this dst @ 2220 -2253 meters is quite revealing about the lower 128 -134 feet . If we do wind up with a thin oil column and it is sread over "our" several square miles ,that would not be difficult to take . Again,my thanks for all the info you share.

[Getitrt2]

Let's keep it real Hession can't decide anything . Interoil BOD has a 36 percent voting interest in whether 7 gets drilled or not . That's not a majority and by ourselves we can't do anything . If they as a group vote for Ant 7 it's because it helps with the basis of design etc etc . But I agree when is enough ???

jft, you are right, of course, and I realize that.  I was responding to Putn's characterization of IOC's internal decision making and recommendation to the JV.  I assume Putn knows that, but the source and nature of his thinking is frequently difficult to evaluate.

I feel sure that regardless of the resuts of an Ant 7, IOC would not be seeking an Ant 8, at least not prior to certification.

[Getitrt2]

The A7 decision hurts shareholders. Period. It helps Hessian, his club and Total. Total gets to delay CAPEX, Hessian and club keep their jobs. The shareholders only relief from this energy market was Total's payment and now they get screwed. We didn't need A6 or A7 to prove enough gas for two trains. Gettit is so dogmatic and his response so primitive he might as well join the IS.

Total can easily handle "CAPEX" on E/A anytime, and I feel sure that is not a primary consideration in their appraisal process decisions.  Also, the objectives of the JV are not limited to "proving enough gas for two trains", far from it.

You're getting personal and abusive, Putn, which is a violation of Board rules, although I feel sure you don't care.  You're one to be talking about primitive and dogmatic thinking and posting.  Your false statements and accusations about various parties border on libelous, I think, if you cannot back them up, which I feel sure you cannot do.

[Tusker]

Perhaps this may qualify as difficult. Source and nature would be exponential.

Even the task of mapping a mouse brain will require 500 petabytes of data storage. A petabyte is 1m gigabytes. For comparison, finding the Higgs boson required about 200 petabytes. A human brain is vastly more complex than a mouse's. It has around 86 billion neurons, compared with 71m in a mouse. And the wiring that links these neurons (cell protrusions called axons) reckoned to be about 100,000km long.

(Brain Research through Advancing Innovative Neurotechnologies)

[Getitrt2]

An incremental billion dollar check will matter to IOC's stock price but I bet not nearly so much as when the FIRST billion  is received.

Getting the stock price significantly higher in the next year with a billion more is more important than a gain to a not as high price sooner, unless you are just looking for a lesser exit point sooner.  Furthermore, an additional $1 billion in the coming year puts the Company in a fundamentally stronger position to take advantage of opportunities for years to come and should add permanently to the stock price.  As Raymond James stated, "As always, it is more important for this process to be done right, rather than done quickly".  I also say, "Get it right", as long as the benefit exceeds any detrimental effect, and I think that is what this management is trying to do.

We'll agree to disagree, but I can't get my head around your argument unless you and Hession currently believe that without the extra 1-3 Ts IOC will have little if any resource payment coming after certification.  Let's get cash rich first and then see what A7 brings.

Again, as posed to Pet, just how can six wells and triangulated flow testing result in a 30% volume error that somehow a 7th well will correct?  Makes no sense to me.

I don't mind agreeing to disagree, but I don't understand what your "head" problem is.  What if instead of $1.3 billion, the base amount on the "Strategy" presentation including FID payment and just enough to fund Papua LNG, IOC got $2.5 billion maybe four to six months later, or instead of $2.2 billion or $3 billion, got $3.4 billion or $4.2 billion, not even considering the potentially greater NPV of its share of a larger Papua LNG project?  You don't think that would have a much bigger positive effect on the stock, with a ridiculously low current market cap of $1.825 billion for all its assets debt free?

If they do certification and payment after Ant 6, and then drill and test Ant 7, there would not be a second certification and additional payment then, barring a major contract modification, but only a final certification after start of production years from now.  Talk about a discounted NPV effect!

On the technical drilling and testing aspects of the decision, you'll have to consult Pet or someone.  Apparently, management now thinks it could make a big difference, but I would say that if after further analysis they conclude otherwise, they will decide against Ant 7 and proceed with certification without it.  You seem to doubt their competence to make that decision properly.     Other than that, I hopefully have added enough clarification to move on.

Assuming A6 drilling is not the disaster seen in the past few wells the only way that A7 would delay the project only 4-6 months is IF in the next 3-5 months a site is selected, prepared to receive the heli-rig and rig readied for spudding.  That appears a very tall order.  Is it even possible that Kirk could oversee the drilling and testing of three 90 day wells in a row?  Past history certainly doesn't suggest a high likelihood of that happening.

BTW, doubting the competence of Hession and his minions to make the decision properly isn't at play here.  The calendar speaks to their apparent competence.  I doubt their motivations.

I guess you have the right to "doubt" the competence and motivations of management and the BOD.  However, at this point it appears that you were wrong about most of what you have said here about all of this, raising serious questions about your "doubts".

[Getitrt2]

Perhaps this may qualify as difficult. Source and nature would be exponential. Even the task of mapping a mouse brain will require 500 petabytes of data storage. A petabyte is 1m gigabytes. For comparison, finding the Higgs boson required about 200 petabytes. A human brain is vastly more complex than a mouse's. It has around 86 billion neurons, compared with 71m in a mouse. And the wiring that links these neurons (cell protrusions called axons) reckoned to be about 100,000km long. (Brain Research through Advancing Innovative Neurotechnologies)

Gee, Tusker, I guess you're right, a huge understatement by me!

[Getitrt2]

The experience and results of Wahoo, an extremely high-pressure wildcat exploration well, hurriedly spudded to meet lease requirements with limited seismic and analysis, is irrelevant to Ant 7. Ant 7, of course, is an appraisal well in an established, well known gas formation with extensive seismic and analysis available.

[Relker]

What puzzles me is how IOC can convince Total that it is necessary to drill A7 as it is not foreseen in the SPA. I can not imagine that they settled something in the secret transitional agreement. Of course IOC can argue that it is attractive to build 3 trains. Drilling Antelop Deep will be paid by the JV and is a cheaper target for this purpose. IOC can offer that they finance the drilling of A7.

[2126]

What puzzles me is how IOC can convince Total that it is necessary to drill A7 as it is not foreseen in the SPA. I can not imagine that they settled something in the secret transitional agreement. Of course IOC can argue that it is attractive to build 3 trains. Drilling Antelop Deep will be paid by the JV and is a cheaper target for this purpose. IOC can offer that they finance the drilling of A7.

Total is the operator and will only drill A7 if they believe it is in their own best interest.

[Palm]

Relker, With Total as Operator the shoe is on the other foot. They are the one charged with analyzing drilling results, design concept, assessing the markets, etc. IOC is at this point on PRL 15 one of the JV partners. They will recommend further drilling if they feel it's necessary, and the SPA is purposely written with the language "one or more" appraisal wells after the initially agreed upon wells so that they can be sure they can size the project properly.

IOC's "brakes" are that additional wells can't delay FID beyond what's "practicable" and it can't take away from the drilling of the exploration well (Ant S). Even if IOC says "No" to an Ant 7 or beyond, it's not clear whether Total could go it alone, or with OSH in an Exclusive Operation, especially if the can say FID and Ant S aren't affected. My guess is they could, but usually that is done in the JVOA as standard practice.

IOC's main issue with this is cash, and as RJ or MS said investor patience. As a JV partner they must be able to fund operations as necessary. At one point they had tons of cash, but as I laid out in a prior post, the cash and LOC will be gone by the end of 2016 and new funding will be necessary.