Two year anniversary

[Tree]

This weekend will mark the two year anniversary of the transformation deal that was going to maximize shareholder value for InterOil shareholders. The following is from the 2013 announcement.
http://www.interoil.com/investor-relations-news-and-press-releases/2013-2/interoil-selects-total-sa-for-png-gas-development/

 The agreement with Total provides for fixed and variable resource-based payments.

In addition to these fixed amounts, variable payments for amounts in excess of 3.5 Tcfe for the gas resource will depend on certification by two independent certifiers following up to three appraisal wells to be drilled in PRL15.

Total will carry the cost of the drilling for the appraisal well program. The program and certification of Elk-Antelope is expected to be completed in 2015.

Dr. Hession said today’s transformational, company-making transaction would significantly benefit InterOil shareholders and the Papua New Guinea people.

I find it amazing that we are now at the end of 2015 and we still need to drill (at least) two additional appraisal wells in PRL15 to know how much InterOil is to be paid.

I do hope the people of Papua New Guinea have benefited from this transaction.  Certainly shareholders have not as the price is down 57% since the deal was announced.
http://bigcharts.marketwatch.com/historical/default.asp?symb=ioc&closeDate=12%2F05%2F13&x=30&y=18

Facts are Friendly.  Here's a fact.  This week marks the 10 month anniversary of the OSH Arbitration Case Dismissal.

 http://www.interoil.com/investor-relations-news-and-press-releases/2015-2/arbitration-claims-dismissed-total-declared-a-party-to-prl-15-jvoa/

Naaah, 13 months of freaking arbitration which ended 10 months ago didn't cripple timelines.

[Gator]

Naaah, 13 months of freaking arbitration which ended 10 months ago didn't cripple timelines.

You just made my point about poor management. What caused the arbitration delay? I think it was Hession selling 75% of E/A when InterOil didn't own 75% of E/A.  He made a deal with Total for the stake the minority investors owned when IOC did not and could not make a deal for the minority investors.  Furthermore, within three month, TOT and IOC changed the % and welcomed OSH into the project.  The arbitration didn't slow down certification.

[Tree]

Naaah, 13 months of freaking arbitration which ended 10 months ago didn't cripple timelines.

You just made my point about poor management. What caused the arbitration delay? I think it was Hession selling 75% of E/A when InterOil didn't own 75% of E/A.  He made a deal with Total for the stake the minority investors owned when IOC did not and could not make a deal for the minority investors.  Furthermore, within three month, TOT and IOC changed the % and welcomed OSH into the project.  The arbitration didn't slow down certification.

You just made my point about conveniently overlooking the damage arbitration did to timelines delays, which  you view out of context.

You just made my point about poor management. What caused the arbitration delay?  

You say poor management  by Hession caused the arbitration delay.  I say OSH  and their losing interpretation of their 'rights' caused the arbitration delay.   This is a teaching moment.  TOT, IOC, PNG legal council and the arbitration panel agreed with Hession (and me) after-all.  TOT was not even a 'declared' legal party to the PRL 15 until 10 months ago.  Since they won the arbitration case, it is a fact that they were legally party to the PRL 15 all along and that exonerates Hession's 'bad management from causing the arbitration process itself.  I'm assuming you agree that Hession did in fact have the right to sell TOT a stake afterall.

If you want to point a finger at poor management, point it at Botten.  He was legally wrong and lost.   He caused the arbitration and the resulting timeline delays you assign to Hession.  OSH's poor management caused arbitration.

The arbitration didn't slow down certification. 

This an absurd claim  To make you correct, a yet not legally determined PRL 15 JV should have pressed on with the re-certification process?  This is laughable to even promote. TOT has been PRL15 Operator 4 months and 7 days.  That's it.

http://www.interoil.com/investor-relatio...of-prl-15/

You think TOT should have been all in spearheading certifcation while in arbitration AND even before they assumed Operatorship status of PRL15?  Sorry, those two requirements are annoyances demanded by legal council.

Time for a refresher:

TOTAL TO RETAIN PNG GAS AFTER OIL SEARCH LOSES ARBITRATION

Sydney (Platts)--11 Feb 2015 411 am EST/911 GMT

French major Total will retain its foothold in Papua New Guinea's emerging LNG sector, after an international arbitration ruling confirmed the validity of its acquisition of a stake in the promising Elk-Antelope gas resource.



In the conclusion to a long-running legal process, the International Court of Arbitration of the International Chamber of Commerce declined to issue PNG-based Oil Search with pre-emptive rights over the transfer of a 40.1% participating interest in the PRL 15 permit, which covers the gas fields.



Total paid US-listed operator InterOil $401 million for the stake, which was transferred to one of its subsidiaries on March 26, 2014.



Oil Search had claimed its February 2014 purchase of a 22.8% share of PRL 15 via a $900 million takeover of Pacific LNG Group Companies had conferred on it pre-emptive rights in relation to the joint venture.

InterOil has retained a 36.5% interest in the permit, with minorities holding the remaining 0.6%.



"In a complex, non-unanimous judgment, the ICC decision declared that Total is a party to the Elk-Antelope joint venture operating agreement, but it also declared that Total has no rights in PRL 15 or in the Elk-Antelope JOA, unless and until InterOil and Total comply with relevant transfer clauses within the JOA," Oil Search said in a statement Wednesday.



"Oil Search anticipates that InterOil and Total will attempt to comply with these terms and the company intends to work constructively with its joint venture partners to resolve all outstanding transfer and joint venture management issues," the company said.



The Elk-Antelope gas resource is regarded as increasingly likely to be big enough to underpin an LNG project comprising at least two production trains, or 8 million mt/year.



For that, the fields, which are currently being appraised with the drilling of two new wells, would need to contain at least 7 Tcf of gas.



Gas from Elk-Antelope could also be used to underpin an expansion of ExxonMobil's existing PNG LNG project, where Oil Search is a joint venture partner.



PNG LNG has two production trains with capacity of 6.9 million mt/year and started producing in mid-2014.



"The Elk-Antelope fields represent a world-class gas resource which has the potential to underpin a major new LNG development or LNG expansion, both of which are potentially commercially attractive, despite the recent sharp fall in oil prices," Oil Search said.



"A key focus for Oil Search, its joint venture partners and the PNG government, is to complete the comprehensive appraisal program currently underway, to have the gas resource in Elk-Antelope certified and move seamlessly into the development phase, as soon as possible."



According to Hong Kong-based analysts with Bernstein Research, Oil Search had wanted to pre-empt the Total acquisition transaction to enable ExxonMobil to enter into the Elk-Antelope project through a re-sale of some of its stake.



Oil Search has argued that the project could be carried out more cheaply and quickly with ExxonMobil involved, they said.



InterOil has said previously it wanted to move work on the development of Elk-Antelope into the front-end engineering and design phase in 2016 and take a final investment decision in 2017, putting first production as soon as 2020-2021.



Bernstein are less optimistic on the project's timing, however, forecasting an FID in 2018 and first LNG in 2022.



"Following this decision both Total and InterOil should be fully aligned in moving forward with a two-train LNG investment as soon as possible," the analysts said.



"If Exxon seeks a position in the project, acquisition of InterOil would now seem the logical move. While the result will come as a disappointment to Oil Search, we see little downside risks and believe the company will play a key role in bridging between the PNG partners and government."



Under the terms of its deal with InterOil, Total agreed to make further payments depending on the size of the Elk-Antelope gas resource certified, at the FID and at the shipment of the first LNG cargo.



Should the resource be determined at 7.1 Tcf of gas, the certification payment would be $580 million, taking the total return to InterOil, including all other contingent payments, to $1.62 billion.



Meanwhile, ExxonMobil is also looking to develop gas it owns in the P'nyang field for an expansion of PNG LNG.



Last month, the US company signed a memorandum of understanding with the PNG government for the expansion, setting a deadline for a final investment decision on the development of P'nyang at the end of 2017.

[ArtM72]

Naaah, 13 months of freaking arbitration which ended 10 months ago didn't cripple timelines.

You just made my point about poor management. What caused the arbitration delay? I think it was Hession selling 75% of E/A when InterOil didn't own 75% of E/A.  He made a deal with Total for the stake the minority investors owned when IOC did not and could not make a deal for the minority investors.  Furthermore, within three month, TOT and IOC changed the % and welcomed OSH into the project.  The arbitration didn't slow down certification.

You just made my point about conveniently overlooking the damage arbitration did to timelines delays, which  you view out of context.

If you want to point a finger at poor management, point it at Botten.  He was legally wrong and lost.   He caused the arbitration and the resulting timeline delays you assign to Hession.  OSH's poor management caused arbitration.

The arbitration didn't slow down certification. 

This an absurd claim  To make you correct, a yet not legally determined PRL 15 JV should have pressed on with the re-certification process?  This is laughable to even promote. TOT has been PRL15 Operator 4 months and 7 days.  That's it.

I don't think that is an absurd claim at all.

It was certainly within IOC's capacity to continue the drilling program knowing that regardless who its partner was to be IOC would be reimbursed.  Those holes had to be drilled and IOC had the money to drill them. The terms of any partnership with Boten had to be at least equivalent to the terms in the Total agreement,  That meant IOC would have had its costs recovered from OSH rather than TOT if OSH won the arbitration.  Instead, Hession appeared to stop and wait.  When he finally did get going he put a bad rig on A4.  And we are still waiting for testing results from A4ST.

Of course it is possible that Hession was constrained in what he could do by the first JVOA.  If in the original JVOA IOC ceded well operations on signing the PSA then there wasn't anything Hession could do if Total decided to wait the arbitration out.  That is of couse pure speculation as the JVOA, an attachment to the PSA, was never released.

So I'm caught between two working hypotheses.  First, a nefarious plot by major international business interests tied to Australia to delay Papua LNG.  Second, incompetance and/or hubris on the part of Hession. Either way the resource payment appears as distant today as it appeared two years ago when the PSA was signed.

[Gator]

December 6, 2013 InterOil announces a deal to sell to Total something they do not own, the IPI Holders stake in E/A. From the conference call:

Evan Calio - Morgan Stanley & Co. LLC Hey. Good evening, guys. Congrats on the discovery I look forward to seeing the sales agreement, which sounds better than the acquisition read on the press release. My first question is just to be clear. You said you will be rewarded $1.5 billion to $4.2 billion gross consideration based upon the resource range in your progression, meaning should we reduce those consideration numbers by the 39% of Total’s purchase, which is held by the IPI holders or could you explain how they are being treated here and what their rights might be going forward, is there a different interest in the four wells?

Michael Hession I can tell you that the IPO, this deal will be between InterOil and Total and the IPI holders and any of the holders will no longer be on the license. So what I’m describing to you today is a deal between InterOil and Total. I’ll just go back through the numbers there, because I’ve got the numbers in front of me. As I said, 5.4 Tcf is $1.5 billion, 6.5 Tcf is $2.1 billion, 9.89 Tcf is $4.2 billion and 11.79 Tcf is $5.3 billion. So that’s the number clarification and I’d say this is between InterOil and Total. And we’ll be making a future announcement with respect to the IPI and any of the equity holders in PRL15

Evan Calio - Morgan Stanley & Co. LLC So would you have to make some payment that’s within the consideration Total is paying you to clean up the IPI holders?

Michael Hession Yes, you got it exactly. Our aim is to actually do effectively a pass through deal, a value neutral deal. Value neutral deal with the IPI holders and we had some very fruitful discussions in that space, but we’ll be making an announcement about that in not too distant future.

February 27, 2014 InterOil is pleased to welcome Oil Search Limited as a partner in the Elk-Antelope fields.

March 26, 2014 InterOil and Total Close Elk-Antelope Transaction Under the revised agreement signed today, Total has acquired – through the purchase of all shares in a wholly owned InterOil subsidiary – a gross 40.1% interest in PRL 15. InterOil retains 35.5% of the licence and immediately receives US$401 million for closing the transaction, and will receive US$73 million on a final investment decision for an Elk-Antelope LNG project, and US$65 million on the first LNG cargo. InterOil will also receive payments for certified gas volumes following appraisal of Elk-Antelope. All fixed and variable payments that were agreed on December 6, 2013 continue to apply pro-rated according to the new equity split, including those for exploration, appraisal and resource certification

March 28, 2014 InterOil Corporation has received notification from Oil Search of a dispute under the Joint Venture Operating Agreement relating to Petroleum Retention License 15 in Papua New Guinea.

June 24, 2014 InterOil shareholder meeting presentation (page 22) lists Antelope 4 and Antelope 5 plan spud Q3 2014 carry from Total. It also shows Antelope 6 (contingent) Possible spud Q42014/Q1 2015 Carry from Total.

February 10, 2015 Arbitration claims dismissed – Total declared a party to PRL 15 JVOA

March 17, 2015 InterOil 2014 Q4 Conference Call Presentation Page 12 still shows Antelope 6 expected spud Q2 2015 and Certification in Q4 2015.

To conclude, you are saying that the arbitration is the cause of the delay and it’s not managements fault even though they 1) caused the reason for the arbitration by not securing the IPI investors before securing a deal with Total and 2) They have known about the arbitration yet have projected a Q4 2015 certification payment in no less than 9 investor presentations since the arbitration was filed (and a few since it was resolved).

[Tree]

December 6, 2013 InterOil announces a deal to sell to Total something they do not own, the IPI Holders stake in E/A. From the conference call:

Evan Calio - Morgan Stanley & Co. LLC Hey. Good evening, guys. Congrats on the discovery I look forward to seeing the sales agreement, which sounds better than the acquisition read on the press release. My first question is just to be clear. You said you will be rewarded $1.5 billion to $4.2 billion gross consideration based upon the resource range in your progression, meaning should we reduce those consideration numbers by the 39% of Total’s purchase, which is held by the IPI holders or could you explain how they are being treated here and what their rights might be going forward, is there a different interest in the four wells?

Michael Hession I can tell you that the IPO, this deal will be between InterOil and Total and the IPI holders and any of the holders will no longer be on the license. So what I’m describing to you today is a deal between InterOil and Total. I’ll just go back through the numbers there, because I’ve got the numbers in front of me. As I said, 5.4 Tcf is $1.5 billion, 6.5 Tcf is $2.1 billion, 9.89 Tcf is $4.2 billion and 11.79 Tcf is $5.3 billion. So that’s the number clarification and I’d say this is between InterOil and Total. And we’ll be making a future announcement with respect to the IPI and any of the equity holders in PRL15

Evan Calio - Morgan Stanley & Co. LLC So would you have to make some payment that’s within the consideration Total is paying you to clean up the IPI holders?

Michael Hession Yes, you got it exactly. Our aim is to actually do effectively a pass through deal, a value neutral deal. Value neutral deal with the IPI holders and we had some very fruitful discussions in that space, but we’ll be making an announcement about that in not too distant future.

February 27, 2014 InterOil is pleased to welcome Oil Search Limited as a partner in the Elk-Antelope fields.

March 26, 2014 InterOil and Total Close Elk-Antelope Transaction Under the revised agreement signed today, Total has acquired – through the purchase of all shares in a wholly owned InterOil subsidiary – a gross 40.1% interest in PRL 15. InterOil retains 35.5% of the licence and immediately receives US$401 million for closing the transaction, and will receive US$73 million on a final investment decision for an Elk-Antelope LNG project, and US$65 million on the first LNG cargo. InterOil will also receive payments for certified gas volumes following appraisal of Elk-Antelope. All fixed and variable payments that were agreed on December 6, 2013 continue to apply pro-rated according to the new equity split, including those for exploration, appraisal and resource certification

March 28, 2014 InterOil Corporation has received notification from Oil Search of a dispute under the Joint Venture Operating Agreement relating to Petroleum Retention License 15 in Papua New Guinea.

June 24, 2014 InterOil shareholder meeting presentation (page 22) lists Antelope 4 and Antelope 5 plan spud Q3 2014 carry from Total. It also shows Antelope 6 (contingent) Possible spud Q42014/Q1 2015 Carry from Total.

February 10, 2015 Arbitration claims dismissed – Total declared a party to PRL 15 JVOA

March 17, 2015 InterOil 2014 Q4 Conference Call Presentation Page 12 still shows Antelope 6 expected spud Q2 2015 and Certification in Q4 2015.

To conclude, you are saying that the arbitration is the cause of the delay and it’s not managements fault even though they 1) caused the reason for the arbitration by not securing the IPI investors before securing a deal with Total and 2) They have known about the arbitration yet have projected a Q4 2015 certification payment in no less than 9 investor presentations since the arbitration was filed (and a few since it was resolved).

"To conclude, you are saying that the arbitration is the cause of the delay and it’s not managements fault even though they 1) caused the reason for the arbitration by not securing the IPI investors before securing a deal with Total and 2) They have known about the arbitration yet have projected a Q4 2015 certification payment in no less than 9 investor presentations since the arbitration was filed (and a few since it was resolved)."

Your bias blinds you Gator.  You are saying that a legitimate sale to TOT (upheld in arbitration as legal) by IOC is the cause for arbitration and the resulting delay?  A-Nine.  Your position is to have  preferred NO stake sale over a sale to TOT as that would have avoided arbitration!  Good Grief.  Don't sell Hession that may trigger an arbitration delay!!  Makes sense I guess to you and a few others.

You should rag on Botten and Civelli, not the entities which crafted a legal, upheld as legal sale which has a resource payment uside (that itself is unique.)

[Gator]

Whoever owns a assets should be able to determine to whom and for how much they sell it for. Hession crafted a sell of the IPI position without their consent or an agreement in place. The IPI investors found a better deal than Hession offered, they took it. The sale to Total was never an issue in arbitration, it was preemptive rights. The sale to Total by IOC was legal just as the sell by IPI to OSH was legal. The selling of the asset was not involved in the arbitration, rather control.

I think the selling to OSH by the IPI investors was the best thing that could happen to InterOil. It showed that a third party was willing to pay at least $4 billion for E/A (22.8% for $900mm plus a draft choice to be named later). Furthermore, without Oil Search we would not be getting any updates on progress and IOC's IR department might actually have to do some work.

[admin]

I think the selling to OSH by the IPI investors was the best thing that could happen to InterOil. It showed that a third party was willing to pay at least $4 billion for E/A (22.8% for $900mm plus a draft choice to be named later).

Yea, agree with this point, at least. Could you be so kind as to remind us that "draft choice to be named later"

[Tree]

Whoever owns a assets should be able to determine to whom and for how much they sell it for. Hession crafted a sell of the IPI position without their consent or an agreement in place. The IPI investors found a better deal than Hession offered, they took it. The sale to Total was never an issue in arbitration, it was preemptive rights. The sale to Total by IOC was legal just as the sell by IPI to OSH was legal. The selling of the asset was not involved in the arbitration, rather control. I think the selling to OSH by the IPI investors was the best thing that could happen to InterOil. It showed that a third party was willing to pay at least $4 billion for E/A (22.8% for $900mm plus a draft choice to be named later). Furthermore, without Oil Search we would not be getting any updates on progress and IOC's IR department might actually have to do some work.

"The sale to Total was never an issue in arbitration, it was preemptive rights. The sale to Total by IOC was legal just as the sell by IPI to OSH was legal. The selling of the asset was not involved in the arbitration, rather control."

Sale to Total was never an issue in arbitration??  Sale was the issue.  What the heck do you think preemptive rights are??  If OSH won the arbitration Total would NOT be in PRL15 JV nor would they be Operator of PRL15.    Why the heck do you think OSH pursued preemptive rights?  It wasn't to make Total a partner and Operator.   You began thread and it was entertained  based upon a grosss misunderstanding of reality by neglecting to point out the chaos which OSH arbitration move played on the timelines.  You should tap out.

"French major Total will retain its foothold in Papua New Guinea's emerging LNG sector, after an international arbitration ruling confirmed the validity of its acquisition of a stake in the promising Elk-Antelope gas resource."

"In a complex, non-unanimous judgment, the ICC decision declared that Total is a party to the Elk-Antelope joint venture operating agreement, but it also declared that Total has no rights in PRL 15 or in the Elk-Antelope JOA, unless and until InterOil and Total comply with relevant transfer clauses within the JOA," Oil Search said in a statement Wednesday.

"Oil Search anticipates that InterOil and Total will attempt to comply with these terms and the company intends to work constructively with its joint venture partners to resolve all outstanding transfer and joint venture management issues," the company (Oil Search) said.

[Gator]

OSH owes IPI Resource base payment. >7 tcf would deliver higher returning LNG project (PNG LNG “look-alike”) and trigger certification payments (US$0.775/mcf for
volumes >7 tcf based on average of two certifiers – Gaffney Cline and NSAI)