ANT 6 & 7

[Putncalls]

Martini LOL.. Weather stinks in Dec on PNG . Rain rain rain . Puts stated he heard from David Wu and expected spud date still Dec . You might want to look up stop losses and what happens with their use especially during tax loss selling season . Total full blast on basis of design .

Not this year.

http://reliefweb.int/report/world/el-ni-...ts-drought

Thanks Brew for that report. I sure like 'truth telling' when it occurs on our board . We need more of that as we go forward instead of  "I don;t understand " when the truth is told.  Best to you and hopefully a great New Year .

sageo, are you saying I am not "telling the truth" when I say I don't see reason for concern about liquidity in the coming year?  Morgan Stanley and Raymond James say IOC has sufficient liquidity for 2016.  Why do you "have a sinking feeling" about having tens of millions of dollars in operating and appraisal expenses, or "losses" as you say, over the next several quarters, when "we" have sufficient liquidity for that and almost certainly will be owed BILLIONS of dollars from Total at the end of that period or shortly afterward?

Given the DR Delay has screwed sharehoders with the late A4,  unjustiied A6, and a surpise A7, I would say that any distrust is justified.

[jft310]

We are not privy to many things . We get bits of information . We do know we have a huge asset that keeps getting bigger . We know there are others involved in making decisions about the appraisal and monetization . We know we are a minority voter in all such decisions .
Ant 4's rig had major problems . That had nothing to do with Hession . The rig is worn out . Ant 6 is another group decision with Hession being a minority partner . To say the well is not required or not needed means you have knowledge about the appraisal process and what those appraisers want to see to validate X T's . No one has that knowledge on this board . Ant 7 has not been approved its been proposed by the minority partner to obtain more money from Total on this round of payments . Who thinks Oil Search wants to pay PACLNG more money ???Who thinks Total wants to pay Interoil more money now ?? Does this explain the none approval of Ant 7 today ????Answer most likely ..

[davidhmtk]

We are not privy to many things . We get bits of information . We do know we have a huge asset that keeps getting bigger . We know there are others involved in making decisions about the appraisal and monetization . We know we are a minority voter in all such decisions . Ant 4's rig had major problems . That had nothing to do with Hession . The rig is worn out . Ant 6 is another group decision with Hession being a minority partner . To say the well is not required or not needed means you have knowledge about the appraisal process and what those appraisers want to see to validate X T's . No one has that knowledge on this board . Ant 7 has not been approved its been proposed by the minority partner to obtain more money from Total on this round of payments . Who thinks Oil Search wants to pay PACLNG more money ???Who thinks Total wants to pay Interoil more money now ?? Does this explain the none approval of Ant 7 today ????Answer most likely ..

JFT - Hession has done some good things - selling the refinery at full price comes to mind, but you have to stop saying he is blameless for the failures of Ant 4's rig.  He was 100% focused on drilling and had a year before he deployed the rig to A4.  His organization should have known it was unreliable and switched rigs around, improved, or replaced it. The rig's multiple failures have set us back 10 months.

Also, I think you are misreading the PR about A7. It seems highly unlikely to me that Hession would focus so heavily on the possiblity of A7 in his last 2 press release if no decision had been made and the JV partners had yet to approve. I don't see him as trying to lobby in public for A7, rather I think it is already agreed and will be announced after it won't push up appraisal costs for OSH' s appraisal process. Total has convinced IOC to be patient in part because both groups want to be marketing the gas in 2017, not 2016 (my opinion). What a long, strange trip it has been.

[jft310]

Hession ordered 2 new rigs when realizing the current rigs were not suitable . Heliport able rigs don't sit on shelves awaiting a buyer . He was stuck with the rig at Ant 4 until the new rigs arrived and then required several more months in Port Moresby to be further modified to be able to be used. If Ant 7 is approved and its proved the fault line is further West by over 1 kilometer indeed that's more proven gas and estimates would rise causing Oil Search to pay more . Fact Interoil wants more money from a successful Ant 7 and the other 2 not so high on wanting to pay more . The Oil Search agreement has no second payment for additional gas found . It's a one time payment and done from their point of view why drill 7 and pay more . Oil Search has zero reason to want Ant 7 before paying PACLNG . If Total can pay for any additional gas on the second payment why not do that just good money management . For them to paying for a basis of design now which determines plant size all 3 partners must think their is most likely enough for a 2 train , size of trains to be determined with the basis of design . Finding more gas would not be monetized with this first build and its not being planned for as they are involved in the basis of design now .

[davidhmtk]

Hession ordered 2 new rigs when realizing the current rigs were not suitable . Heliport able rigs don't sit on shelves awaiting a buyer . He was stuck with the rig at Ant 4 until the new rigs arrived and then required several more months in Port Moresby to be further modified to be able to be used. If Ant 7 is approved and its proved the fault line is further West by over 1 kilometer indeed that's more proven gas and estimates would rise causing Oil Search to pay more . Fact Interoil wants more money from a successful Ant 7 and the other 2 not so high on wanting to pay more . The Oil Search agreement has no second payment for additional gas found . It's a one time payment and done from their point of view why drill 7 and pay more . Oil Search has zero reason to want Ant 7 before paying PACLNG . If Total can pay for any additional gas on the second payment why not do that just good money management . For them to paying for a basis of design now which determines plant size all 3 partners must think their is most likely enough for a 2 train , size of trains to be determined with the basis of design . Finding more gas would not be monetized with this first build and its not being planned for as they are involved in the basis of design now .

JFT -  If I accept your facts on A7 (essentially that Total & OSH will not approve), then Hession's emphasis on the possibility is foolish.   Either he is foolish or he knows something about his 2 partners' intentions.  I think he knows they will approve.

[jft310]

April 2014 Interoil signed it's agreement with High Artic after having problems with the current rigs .
I can say when one asks IR several times now about Ant 7 they say it has not been approved . One has to ask why has it not been approved ????Some reasons are Oil Search has zero incentive for Ant 7 . Total can defer paying Interoil if they so chose in a weak energy market so why not defer .
Energy prices are supposed to start to recover next year is that enough to want to pay Interoil more sooner ??????
Not to say it will not happen but the non approval by partners screams not now .

[TomCrooz]

April 2014 Interoil signed it's agreement with High Artic after having problems with the current rigs . I can say when one asks IR several times now about Ant 7 they say it has not been approved . One has to ask why has it not been approved ????Some reasons are Oil Search has zero incentive for Ant 7 . Total can defer paying Interoil if they so chose in a weak energy market so why not defer . Energy prices are supposed to start to recover next year is that enough to want to pay Interoil more sooner ?????? Not to say it will not happen but the non approval by partners screams not now .

So why not apply the same logic to the Big Payment in June?

[Putncalls]

We are not privy to many things . We get bits of information . We do know we have a huge asset that keeps getting bigger . We know there are others involved in making decisions about the appraisal and monetization . We know we are a minority voter in all such decisions . Ant 4's rig had major problems . That had nothing to do with Hession . The rig is worn out . Ant 6 is another group decision with Hession being a minority partner . To say the well is not required or not needed means you have knowledge about the appraisal process and what those appraisers want to see to validate X T's . No one has that knowledge on this board . Ant 7 has not been approved its been proposed by the minority partner to obtain more money from Total on this round of payments . Who thinks Oil Search wants to pay PACLNG more money ???Who thinks Total wants to pay Interoil more money now ?? Does this explain the none approval of Ant 7 today ????Answer most likely ..

Total can not defer the big check unless it approves A7. If they aren't in any hurry why not spend a little more time planning?

Hession has a great thing going now. Why put a tempting buyout morsel in the bank?

[ArtM72]

Isn't it true the resource Päyment comes in two 50% installments, the second half at FID? That's what I read in the SPA anyway.

[2126]

Isn't it true the resource Päyment comes in two 50% installments, the second half at FID? That's what I read in the SPA anyway.

Not quite correct. There are many additional payments delineated in the SPA: The next upcoming payment is the Interim Resource Payment, which is a variable amount depending on the amount of gas certified by the appraisal process. For example: if 7.1 tcfe is certified, this IRP will be $907.1 million, which will be payable within 10 days after the appraisal reports are filed with IOC and Total [appraisal reports are due 90 days after the trigger date, which is the end date of the testing of the appraisal wells). The second upcoming payment is a fixed payment which is payable at FID, and which is set at $698.71 million.

Thus, if 7.1 tcfe is certified, the total of the two payments will be $1,605.81 billion, with this total increasing with higher certified gas amounts, payable at $1.00/mcfe. All indications are that the total certified amounts will be significantly higher than 7.1 tcfe, and thus, the IR payment portion will be higher as well.

Also, don't forget that there will also be a First LNG Cargo payment of $100 million; a later Final Resource Payment and that there may also be a Discovery Bonus payable under the SPA of $100 million/tcfe for any gas discovered within PRL 15, but outside of the existing PRL 15 E/A field (ie. Ant South). [Source: Total/IOC SPA: Schedule 6: Determination of Interim Resouce Payment and Final Resource Payment]