Mulacek Update - IOC trying to sell assets NOOS

[ArtM72]

How many time can someone possibly use the word "possible" in trying to make a case? Is it possible that Phil might possibly be creating a media buzz around possible events which might possibly occur? Is 4% possibly the new 10%? Sometimes the need to be in the limelight makes you do funny things

Palm, I would use "pathetic" rather than "funny."  The announced strategy has been to monetize assets.  So now the prospect of monetizing assets is a concern to "concerned Shareholders" (i.e., Philippe and his cousin) for what reason?  Before they get to perform?  Limelight is a gentle description.  As I have written on different threads, this is all about power and influence, not about money.

i hate to disagree but the strategy was to discover, appraise and THEN monetize.  Big difference.  Of course you can argue after six wells, two long term flow tests and God knows how many kilometers of seismic it is impossible to imagine the size of EA remains unknown (except to the public).

[Tree]

What is amazing is continued thinking that E/A resource size determination requires the blessing of 3rd party estimators. The data room has been open, OSH, TOT and XOM had purchased or had exclusivity agreements to purchase. JP and SK Co's, and Majors like Woodie have been sizing us up. These partners/potential SD partners/potential takeover or merger partners have damn well known how big E/A and PRL15 it sits within, is for months, if not years.

[jft310]

Everyone should know the quality of work GLJ produces . The market is fixated on a 3 year old number for size which is also amazing . Looking at the stock price the market thinks no sell down of PRL-15 or sell out , no sell down of TBR , size will be under 5 T's , drilling will be stretched out for years . None of which is true .

[CAC]

Tree --  What is amazing is continued thinking that E/A resource size determination requires the blessing of 3rd party estimators. The data room has been open, OSH, TOT and XOM had purchased or had exclusivity agreements to purchase. JP and SK Co's, and Majors like Woodie have been sizing us up. These partners/potential SD partners/potential takeover or merger partners have damn well known how big E/A and PRL15 it sits within, is for months, if not years.

******

I agree that potential suitors probably already know the size of E/A but that's not all they care about.  The resource payment is also relevant in valuing IOC as a potential target.  It is a subtle distinction I suppose, but the resource payment isn't based on "the size of E/A", it is based on what the 3rd party estimators say the size of E/A is.  If I were a suitor (other than TOT), and I knew TOT could potentially influence the estimators in ways that would reduce their cash payment to me, I might wait and see how that played out (even if I knew how big E/A actually was).  The best case scenario for TOT, in my opinion, would be for them to "already know" there is 9T's in the ground (via their access to the existing data), and already know they will end up with a 2-train plant...but also find a way to get the estimators' avergae number to come in at 7T's.  Win-win for them. 

In fact, if you extend this cynical/pragmatic thinking a little further, one could see a scenario in which TOT is making decisions right now with a goal of intentionally minimizing the estimators' numbers.  I am not suggesting this is occuring, but we are talking big, big numbers, so I think it would be naive to conclude it couldn't happen this way.  

[ArtM72]

What is amazing is continued thinking that E/A resource size determination requires the blessing of 3rd party estimators. The data room has been open, OSH, TOT and XOM had purchased or had exclusivity agreements to purchase. JP and SK Co's, and Majors like Woodie have been sizing us up. These partners/potential SD partners/potential takeover or merger partners have damn well known how big E/A and PRL15 it sits within, is for months, if not years.

Tree, I'll certainly agree with you here.  It is only the public that doesn't know anything more than what our official appraisors continue to tell us.  That brings us to the question of whether appraisal certification delays are being used to delay FID which is clearly not allowed under the SPA.

Connect the dots.  (Whatever happened to Sleuth, anyway?)

[2126]

"I have a question for those who would know the answer.  Is requiring shareholder approval for selling >10% of an asset normative for an O&G company?"

In general, shareholder approval is not required for the sale of assets of any corporation, unless such sale constitutes a complete liquidation of a company's assets. It would be very, very unusual for a company (and, particularly, an exploration O&G company such as IOC) to agree to shareholder approval for the sale of just 10% of its assets. Such a restrictive process would make it nearly impossible for a company to operate in a timely or profitable manner, particularly an exploration O&G company whose main purpose is to monetize their assets. This particular proposal would effectively hamstring IOC in any negotiations with other entities, not to mention endless frivolous lawsuits by disgruntled shareholders asserting that such-and-such asset sale was actually greater than 10% (how to determine such a percentage would be very difficult in a rapidly-changing O&G environment).

Phil and his group, I believe, fundamentally misunderstand the role of shareholders in modern corporations. Shareholders duties/responsibilities encompass their rights to elect the BOD, approve the sale or merger of the company (or the sale of essentially all of the assets of the company), and the various rights that accrue to an equity owner by virtue of one's proportionate share of ownership of the company itself. The BOD, in turn, has the authority to make all major corporate decisions (other than the sale or merger of the company), including the hiriing of executive officers of the company, without either shareholder input or approval. This is basic corporate law for virtually all corporations. The officers then have the authority to handle the general day-to-day business of the company, including negotiations with 3rd parties to sell some of the company's assets.

Phil, as former CEO and member of the BOD--but now as only a shareholder of IOC, has not come to grips with the fundamental change in his status within the IOC world. His proposals seem to be an attempt to regain a measure (perhaps a large measure) of that status by altering the basic rules under which a corporation operates (shareholders dictating the # of members of the BOD, shareholders having approval rights over sales of small amounts of a company's assets, shareholders amending BOD policy to ensure directors understand working in the PNG jungle, shareholders amending IOC policy to require disclosure to shareholders of development plans and negotiations, etc.) All of the proposals are highly unlikely to find support with major shareholders (other than Phil, et.al.) as such policy changes would make IOC far less able to operate with the flexibility and speed necessary in a modern competitive environment.

[jft310]

I can't imagine large institutional shareholders supporting Phil .

[katytrader]

"I have a question for those who would know the answer.  Is requiring shareholder approval for selling >10% of an asset normative for an O&G company?"

In general, shareholder approval is not required for the sale of assets of any corporation, unless such sale constitutes a complete liquidation of a company's assets. It would be very, very unusual for a company (and, particularly, an exploration O&G company such as IOC) to agree to shareholder approval for the sale of just 10% of its assets. Such a restrictive process would make it nearly impossible for a company to operate in a timely or profitable manner, particularly an exploration O&G company whose main purpose is to monetize their assets. This particular proposal would effectively hamstring IOC in any negotiations with other entities, not to mention endless frivolous lawsuits by disgruntled shareholders asserting that such-and-such asset sale was actually greater than 10% (how to determine such a percentage would be very difficult in a rapidly-changing O&G environment).

Phil and his group, I believe, fundamentally misunderstand the role of shareholders in modern corporations. Shareholders duties/responsibilities encompass their rights to elect the BOD, approve the sale or merger of the company (or the sale of essentially all of the assets of the company), and the various rights that accrue to an equity owner by virtue of one's proportionate share of ownership of the company itself. The BOD, in turn, has the authority to make all major corporate decisions (other than the sale or merger of the company), including the hiriing of executive officers of the company, without either shareholder input or approval. This is basic corporate law for virtually all corporations. The officers then have the authority to handle the general day-to-day business of the company, including negotiations with 3rd parties to sell some of the company's assets.

Phil, as former CEO and member of the BOD--but now as only a shareholder of IOC, has not come to grips with the fundamental change in his status within the IOC world. His proposals seem to be an attempt to regain a measure (perhaps a large measure) of that status by altering the basic rules under which a corporation operates (shareholders dictating the # of members of the BOD, shareholders having approval rights over sales of small amounts of a company's assets, shareholders amending BOD policy to ensure directors understand working in the PNG jungle, shareholders amending IOC policy to require disclosure to shareholders of development plans and negotiations, etc.) All of the proposals are highly unlikely to find support with major shareholders (other than Phil, et.al.) as such policy changes would make IOC far less able to operate with the flexibility and speed necessary in a modern competitive environment.

2126, thank you for the well-articulated tutorial.

katytrader

[Li'loilady]

"I have a question for those who would know the answer.  Is requiring shareholder approval for selling >10% of an asset normative for an O&G company?"

In general, shareholder approval is not required for the sale of assets of any corporation, unless such sale constitutes a complete liquidation of a company's assets. It would be very, very unusual for a company (and, particularly, an exploration O&G company such as IOC) to agree to shareholder approval for the sale of just 10% of its assets. Such a restrictive process would make it nearly impossible for a company to operate in a timely or profitable manner, particularly an exploration O&G company whose main purpose is to monetize their assets. This particular proposal would effectively hamstring IOC in any negotiations with other entities, not to mention endless frivolous lawsuits by disgruntled shareholders asserting that such-and-such asset sale was actually greater than 10% (how to determine such a percentage would be very difficult in a rapidly-changing O&G environment).

Phil and his group, I believe, fundamentally misunderstand the role of shareholders in modern corporations. Shareholders duties/responsibilities encompass their rights to elect the BOD, approve the sale or merger of the company (or the sale of essentially all of the assets of the company), and the various rights that accrue to an equity owner by virtue of one's proportionate share of ownership of the company itself. The BOD, in turn, has the authority to make all major corporate decisions (other than the sale or merger of the company), including the hiriing of executive officers of the company, without either shareholder input or approval. This is basic corporate law for virtually all corporations. The officers then have the authority to handle the general day-to-day business of the company, including negotiations with 3rd parties to sell some of the company's assets.

Phil, as former CEO and member of the BOD--but now as only a shareholder of IOC, has not come to grips with the fundamental change in his status within the IOC world. His proposals seem to be an attempt to regain a measure (perhaps a large measure) of that status by altering the basic rules under which a corporation operates (shareholders dictating the # of members of the BOD, shareholders having approval rights over sales of small amounts of a company's assets, shareholders amending BOD policy to ensure directors understand working in the PNG jungle, shareholders amending IOC policy to require disclosure to shareholders of development plans and negotiations, etc.) All of the proposals are highly unlikely to find support with major shareholders (other than Phil, et.al.) as such policy changes would make IOC far less able to operate with the flexibility and speed necessary in a modern competitive environment.

2126, thank you for the well-articulated tutorial.

katytrader

The epitomy of equanimity.  Thank you 2126 and Katy for sharing your expertise with us in these matters that we will be voting on.  What you posted above confirms my own common sense.  I also appreciated Kaliboo's exchange with you at this link (post #28)

http://shareholdersunite.com/mybb/showthread.php?tid=10078&pid=68278#pid68278

Knowledge + wisdom.  Very handy.  Thanks folks.

[2126]

Katy and Li'oilady: Thanks for your kind words.